The purpose of general liability coverage is to protect you from the high costs associated with lawsuits that may involve your business. While not every small business absolutely needs to have this type of coverage, there are reasons to consider getting it. If they aren’t sure what they need in terms of business insurance, San Diego business owners should contact their insurance agents to make sure they have the coverage necessary to protect their interests. Here’s what you need to know about general liability coverage and when you may need it.
When General Liability Insurance is Needed
There are four basic scenarios that could apply to your small business when you’ll likely need or benefit from general liability insurance. These are:
- If you have a physical business location open to the public
- If you work closely with customers and/or clients on a regular basis
- If you regularly handle client property (e.g., providing service at client locations)
- If you rent or own commercial property
Contract-Required General Liability Insurance
It’s common for small businesses to rent commercial property for operations. This could include space for office work, manufacturing, or an assortment of other purposes. Many of the contracts involved with rental spaces for small business owners include the requirement to have general liability insurance. If this applies to your business, you’ll need this type of coverage.
When General Liability Insurance Isn’t Required (but Still a Good Idea)
Even if you’re not contractually obligated to have general liability coverage, it can be a good idea to have what’s referred to as commercial general liability insurance, or CGL. This is something that can be especially beneficial if you run a small business that involves regular client and customer interactions. This type of coverage provides protection against legal action involving:
• Slip-and-falls and other accidents that may affect customers coming and going from your business
• Property damage
• Bodily injuries suffered by anyone outside of your business related to your business operations
• Certain legal matters involving your competitors
• Advertising-related injuries
How Your Small Business Benefits from General Liability Coverage
A CGL policy covers a broad range of legal expenses if your small business is sued. It’s important to note this coverage applies to legal action specifically taken against your business and not you personally. It typically includes financial assistance with:
• Attorney costs
• Court-ordered judgments
• Expenses related to settlements
Also, legal fees can deal a serious financial blow to a small business. One of the reasons is because smaller businesses typically operate with smaller profit margins and lack convenient access to in-house legal teams.
Possible Legal Obligations & Other Considerations
Typically, you’re not legally obligated to have general liability insurance simply because you own and run a small business. However, some states do require this type of coverage for certain industries. Even if not required by your state, CGL coverage may still be required by commercial property landlords, mortgage companies, or, in some instances, certain clients.
If any of these circumstances apply to you as a small business owner, you would need to present a certificate of insurance as proof of coverage. How much you’ll pay for general liability coverage depends on several factors, including:
• The amount of coverage you prefer or need
• Risk factors that apply to your business, niche, or industry
• Your location
• The actual size of your business and how many employees you have
If you’re a small business owner, make sure to protect your business by purchasing the right insurance coverage. For affordable, reliable business insurance as well as homeowners, renters, motorcycle, and auto insurance, San Diego residents call on the trustworthy professionals at Altra Insurance Services. Reach out to us today at (800) 719-9972 to learn how we can satisfy all your insurance needs.