One of the most vital business insurances is general liability insurance coverage. Though this coverage isn’t a requirement by law, it’s an important investment as it protects your commercial assets and pays for damage your business causes to others. Here’s a closer look at why you should consider purchasing general liability insurance for your business.
Importance of General Liability Insurance for a Business
The main purpose of general liability insurance coverage is to have a financial safety net in place in case someone decides to sue your company. It’s particularly important for an establishment that serves the public to carry this coverage. A person can get injured or fall ill even in the safest environments. For example, if someone trips and gets hurt on your property, they can file a claim that your insurance company may have to pay, depending on the details.
Owning general liability insurance helps you maintain your professional reputation if a legitimate claim arises. Many cases get handled out of court as your insurance coverage helps resolve disputes with third parties.
There are various other types of lawsuits that might be filed by disgruntled employees or unsatisfied customers who think they got a raw deal from your business. General liability coverage pays for lawsuits involving defamation and copyright infringement. A competitor might not like what you said about them on social media and file a libel case against your business.
While libel is a form of defamation based on published writing, slander is delivered by the spoken word. Regarding copyright infringement, you can get sued by a business that accuses your company of stealing part of their logo or marketing statements. These types of cases can weigh a company down, particularly those operating on tight budgets.
Determining the Right General Liability Coverage Amount
One of the biggest decisions you’ll make with your commercial insurance involves your coverage limits. These limits are based on potential risks unique to your business. After a coverage limit is met in a claim, the onus falls on your business to cover the balance. An alternative is to pay more and raise your coverage limits for better protection against risks.
Many businesses choose umbrella insurance to supplement their basic general liability plans. This approach works well for niche businesses that need highly customized insurance policies. Some umbrella plans extend coverage limits, while others fill in gaps due to limited primary coverage.
The coverage amount you choose may depend on multiple factors, such as the size of your operation and how many customers you serve. It’s important to remember that the higher the profile of your business, the more insurance coverage you’ll need to safeguard it from lawsuits. Some lawsuits are not legitimate, but even they can be costly, which is why general liability insurance is necessary from a business survival perspective.