Facts About General Liability Insurance Coverage
Almost any business you start requires general liability insurance. The sole purpose of general liability insurance coverage is to protect the company and its owner from claims resulting from property damage and injuries. Claims regarding bodily harm are costly for the business. First, you must pay the attorney for representing you in court proceedings, negotiations, and settlements. After settling the claim, the company may incur the cost of compensating the afflicted party if it is found liable. In today's litigious business environment, you may face lawsuits from customers, suppliers, the government, or other parties outside the firm. Therefore, general liability insurance coverage is a basic necessity for a business. This article discusses some of the facts you should know before getting a general liability insurance policy.
Limitations
General liability insurance coverage only pays for claims made by third parties. Third parties can be your suppliers, customers, and other professional service providers. This insurance coverage does not protect you from claims made by workers due to losses incurred at the workplace. If your workers, agents, or other members of your organization incur debts, this insurance cannot protect you. Therefore, you must seek other insurance policies to protect yourself from claims made by people who are not third parties. Ensure you consult your insurer to explore the insurance needs of your business.
General Liability Insurance is not Mandatory
The law does not need your firm to have this type of insurance coverage. This insurance coverage is like most types of commercial insurance that are optional in most countries. Some states require you to have workers' compensation, commercial auto, liquor liability, and professional liability insurance covers. Therefore, some business owners may feel that they do not require general liability cover. However, you can never be sure about your ability to evade certain liabilities in the business world. For this reason, a general liability insurance policy is often a mandatory requirement in high-value contracts. Hence, you still require this type of insurance even though it is not a legal requirement.
Obtaining a License
Some states need a general liability insurance policy before the authorities issue a license for certain business activities. For example, your business may require this insurance coverage if you deal with electrical services, motor vehicle repairs, or plumbing. This insurance is essential in obtaining business licenses since it shows that you can pay for your defense and compensate the aggrieved party. Most claims occur due to damages caused by your actions or inaction, and the plaintiffs sue you under the law of tort.
Slip and Fall
General liability coverage helps pay for the medical costs of anyone injured at your workplace. The law dictates that your business is responsible for the safety of visitors. Your business should also install measures that ensure the premises are reasonably safe. Some slight accidents may occur, and the random person may not sue you. Still, you have a legal obligation to pay for their medical cost. Therefore, the insurance cover pays for their medical expenses.
General liability insurance coverage only pays for claims from third parties. This insurance coverage is not mandatory but is essential when obtaining specific licenses and paying for slip and fall accidents at the workplace.