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Business general liability insurance protects your small business from the financial impact of lawsuits related to personal injury or property damage. It typically covers both the damages awarded in a court case and the associated legal costs. Depending on your specific business needs, this essential coverage can be tailored in various forms.

Why is General Liability Insurance Important for Your Business?

Operating a business comes with inherent legal responsibilities toward your employees, clients, and the general public. If an injury occurs to an employee or a member of the public, or if property is damaged, your business could be held legally liable to pay for those damages. This can happen if you or your employees are found to be negligent or in breach of a legal duty.

What Types of Business General Liability Insurance Are There?

There are several key types of general liability insurance that businesses commonly need, each designed to protect against specific risks.

Public Liability Insurance

Public liability insurance is a primary form of coverage designed to protect your business from claims related to injury, property damage, and even advertising-related claims. It covers your legal obligation to pay damages to members of the public for death, bodily injury, or damage to their property resulting from your business operations. This also includes legal fees, costs, and expenses, such as representation at a coroner's inquest, fatal accident inquiry, or other court proceedings stemming from an incident.

When determining your coverage amount, carefully consider the maximum potential claim that could be made against your business. Businesses with higher risks, such as those involving severe fire hazards or the potential for multiple personal injuries, might face claims far exceeding standard coverage limits. The coverage limit typically applies to claims arising from a single event.

Employees Liability Insurance

Business owners providing services should also consider professional liability insurance, often known as errors and omissions (E&O) insurance. This policy protects your business against claims of mismanagement, errors, negligence, or omissions in your professional services. Depending on your industry, carrying such a policy may be a legal requirement.

Furthermore, by law, most employers must carry coverage for their legal responsibility for injury, illness, or fatality sustained by employees and arising from their employment. This includes not only employees under a direct contract of service but also trainees, apprentices, and those hired from another employer. A common exclusion applies if all your employees are close family members, but you should verify if this applies to your specific situation.

Product Liability Insurance

Small businesses that advertise, manufacture, or sell products should be protected in case someone is injured or harmed as a result of using their goods. The necessary amount of coverage and the level of risk depend heavily on the type of business. For example, a retailer selling scrapbook supplies will likely face fewer risks than a manufacturer of wood stoves.

If you create, refurbish, or sell products, you could be held legally responsible for injury or harm resulting from defects in their design or manufacturing, even if you were not negligent. Product liability insurance covers you in these situations up to a specified maximum amount annually.