Benefits of General Liability Insurance for Small Businesses

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The main reason for having general liability insurance is to protect your business from incurring unexpected losses (e.g. due to legal claims resulting from workplace injuries or accidents). Another common form of protection that businesses typically employ is called workers' compensation insurance. However, the two are very different in what they specifically cover.

Businesses use workers' compensation insurance to protect themselves from lawsuits from their employees (as well as to actually pay their employees should they get injured at work). Both general liability insurance for small business owners and workers' compensation are vital protection methods that all businesses should be using. Below we go into detail regarding the benefits of liability insurance, and how to find the best insurance company for your business. 

Why You Should Have a Business Liability Insurance Policy

Having a general liability insurance policy is an absolute must for nearly any business (across any industry). Although it's not required by law, it's absolutely recommended across the board (no matter what type of business it's for). What if someone gets injured while at your business's location? How would you be able to protect yourself from their legal charges? That's where a liability policy comes into play. The point of opening a liability policy for your company is to protect it from these types of legal actions. 

What Does Liability Insurance Cover?

Liability insurance policies cover a business's liability costs in regards to injuries, accidents, or negligent operation. They also cover 3rd party property damage. An example of this would be a person injuring themselves at a business's location and then taking legal action against the business (by suing them for damages). If that business doesn't have a liability policy, they will be paying those damages out-of-pocket. You can learn more about specific types of coverages at the Insurance Information Institute.

One of the lesser-known benefits of having a liability policy is that it protects against what's known as "advertising injury." You're probably wondering what exactly "advertising injury" is, and why it can be hurtful to your business. Advertising injury includes damages brought against a company related to false advertising and related issues (copyright infringement, libel, etc.). 

What Does General Liability Insurance Not Protect Against?

This is an all too common question that even some people in the insurance industry fail to have an answer for. The following list describes four of the main things that a liability policy won't protect against:

• Work-related auto accidents

• Work-related employee injuries/illness 

• Damage to work property

• Service errors

Each of the above types of insurance claims have their own respective policy types. Work-related auto accidents need to be covered by a commercial auto insurance policy. Work-related employee injuries are covered by a company's workers' compensation policy. Any damage done to property owned by a business needs to be protected by a commercial property policy. Likewise, and error of service claims must be covered by an "errors and omissions" policy. 

How to Choose the Best Liability Policy for Your Business

By now you should recognize the importance of having a liability policy for your business. It's not just something that's nice to have, but it's essential for the safeguarding of your business's success. Below we go over some of the main areas of importance you should focus on when choosing an insurance provider.

Cost

It's obviously important to choose a policy that fits within your budget. Before going with any one company, you should do your due diligence and shop around. Exactly how much you're going to pay depends entirely on your industry, the size of your company, etc. Smaller companies that don't have a lot of employees will typically pay much less compared to large companies with numerous employees. 

Reliability 

Cost is one of the most important factors to consider when choosing an insurance company, but you also need to think about the company's reliability as well. There's no point in going with a cheaper policy if it's not actually going to protect you in the end. When you're browsing for a policy, look into each company's history, as well as reviews from current and/or past customers. This will help you develop a deeper understanding of each company's strengths and weaknesses.

Quote Comparison 

Carefully compare the quotes you receive during your search for a liability policy. Are they fair? How do they compare between each other? How did each company calculate their quote? These are the kinds of questions you should be asking during the comparison process.