Nowadays, for a business, the chances of getting sued have dramatically increased over time and it has become a real headache for the business owners. So it has become necessary for every business to have general liability insurance. General liability insurance can prevent a legal suit from turning into a financial disaster for the business. It provides financial protection to your

business, in case your business is ever sued or held legally responsible for some injury or damage. There are many more features and provisions of business general liability insurance which we will see further. But before that we must have a clear idea regarding general liability insurance.

General Liability Insurance an insight

In todays litigious society, even small mishaps can result in large lawsuits. Thats why general liability insurance has become necessary for every one. Actually it protects the assets of a business when the business is sued for something; it has done or hasnt done, causing injury or property damage. General liability insurance can be purchased separately or as a part of business-owners policy (BOP). A BOP bundles property and liability insurance into one policy. But the businesses that need more coverage purchase liability insurance as a separate policy as in BOP the liability coverage limit is low.

However there are certain factors which determine the amount of coverage a business needs. These are: -

1. Probable risk: The first thing that a business owner must determine is the amount of risk involved or associated with their business. For example a business which is into the production of heavy machinery involves more risk than a business which is into the production of linens. Therefore the business

which produces heavy machinery will require or need more general liability insurance.

2. State of operation: It is also very important to determine the state in which you are operating your business. There are certain states which may offer high damage amounts to the plaintiffs. So in that case you will require a higher general liability insurance with higher coverage limits. Regarding this an insurance broker can offer you better guidance.

Understanding General Liability Insurance Procedure

As in all insurances in general liability insurance also there are two parties namely the insurer and the insured. Insurer is the person who insures the aggrieved person. And the person for whom the insurance policy is taken is known as the insured. So in case of a general liability insurance the company which gives the general liability insurance to the business will be the insurer and the business owner whose business is insured will be the insured. For this the insurer is obligated to pay the legal costs of a business in a coverage liability claim or lawsuit. There are particular types of coverage that are covered by the general liability insurance which we will see further. But for the time being it is necessary to know that these insurance companies also cover compensatory and general damages. However, punitive damages are not covered under general liability insurances because they are considered to be punishment for intentional acts.

For the purpose of general liability insurance the policy will always state a maximum amount that the insurer will pay during the policy period. These policies also list the maximum amount the insurer will pay per occurrence. For example if the company has a $2 million occurrence then cap in its liability policy and it is successfully sued for $2.5 million. Then the insurer would be responsible to pay only $2 million and the rest amount of $500,000 will have to be given by the company. But to cover these situations the companies tend to purchase umbrella liability insurance, which picks up where their general liability coverage ends. In other words the umbrella liability insurance covers payments that exceed their other policys limits thereby providing additional coverage for liabilities not covered in a standard liability insurance policy.

Now to get the insurance cover most insurance companies require their policyholders to report spam as soon as possible, any accidents happen that could lead to a liability claim. Then the insurer may require the business owner to document the situation and forward all legal notices and summonses. The business owner should also cooperate fully with the insurer company in any investigations the insurer company will undertake.

General Liability Insurance Coverage

The general liability insurance covers a broad range of situations. They are:

1. Bodily injury: The general liability insurance covers bodily injury which includes the cost of care, the loss of services and the restitution for any death that may result from the injury.

2. Property damage: General liability insurance also covers physical damage to the property of others or the damage caused due to the use of that property.

3. Products completed operation: This type of liability coverage provides liability protection to such a loss if an injury has resulted from something the company has made or services the company has provided. However it is to be noted that the damages and the legal expenses will be covered only up to the policys limit.

4. Product liability: Product liability is a more specialized liability insurance that protects your company against lawsuits from product related injury or accidents.

5. Contractual liability: It is a kind of coverage which covers damages which might occur out of the variety of contracts that you have entered.

6. Other coverages: Apart from the coverage that are mentioned above there are certain other coverage that are included such as reasonable use of force, borrowed equipment, liquor liability, non-owned vehicles (such as air craft and watercraft), fire damage, lightning damage, explosion damage, water damage liability protection, legal defense costs, medical payments, personal injury, advertising injury and specialized liability protection for specific business types.

Precautions

Though there is general liability insurance to protect your mistakes from turning into a disaster but by taking some precautions before an accident we can help ourselves by keeping our liability and insurance rates down. By following certain steps all businesses can lower the chance of a liability insurance claim: -

1. By setting a high standard for product quality control.

2. By making sure that all the company records are complete and up-to-date.

3. By ensuring that all employees are properly trained.

4. Taking safety tips from your insurance company for the type of your business.