Exploring the Coverage Limits of General Liability Insurance Coverage for Small Business
Ensuring financial security in the face of uncertain liabilities and potential claims is a vital consideration for all businesses. General liability insurance covers a range of potential risks, from bodily injury and property damage to personal injury or advertising errors. However, exclusions and limits also apply, and businesses must understand these to ensure adequate coverage. This guide sets out to explore the coverage limits of general liability insurance.
Understanding General Liability Insurance
General liability insurance provides financial protection for a business against claims of bodily injury, property damage, personal injury, and advertising injury caused by the insured’s operations, products, or services. It covers legal costs and any settlements or judgments within the policy limits.
Coverage is crucial for most businesses because it can help protect against expensive and possibly financially devastating lawsuits and claims. Even simple slip-and-fall accidents on business premises can lead to massive payouts without adequate insurance.
Lawsuits and claims can come from customers, vendors, employees, and third parties. Having general liability coverage helps ensure the business has financial protection and will not be forced to close due to the costs of legal issues.
What Does General Liability Insurance Cover?
Bodily Injury and Property Damage Liability
General liability insurance policies cover bodily injury and property damage liability claims. This includes physical injuries sustained by customers who slip and fall on a wet floor or are injured by defective products. It also covers property damage, such as if a delivery driver damages a customer’s property while delivering.
Personal and Advertising Injury Coverage
Apart from bodily injury and property damage, general liability insurance includes personal and advertising injury coverage. Personal injury refers to claims arising from non-physical harm caused to someone by your business. This may include allegations of libel, slander, invasion of privacy, false arrest or detention, and more.
Advertising injury coverage, on the other hand, protects businesses against claims related to their marketing. This can include claims of copyright infringement, misappropriation of ideas, or plagiarism.
Medical Payments Coverage
Most general liability policies also include medical payment coverage. This pays the medical expenses of third parties who sustain bodily injury because of the insured’s business operations or products, regardless of liability.
Adequate general liability insurance protects most businesses from potentially catastrophic legal claims and lawsuits. Consult an experienced insurance agent to ensure your business has sufficient coverage to mitigate risks.
The NEC Insurance crew has spent more than 45 years developing and maintaining a solid portfolio of credible carriers. There’s no shortage of options when you partner with our professionals.
Limits to General Liability Insurance Coverage
General liability insurance policies provide broad coverage for third-party bodily injury and property damage claims, but they are not all-encompassing. There are standard exclusions built into these policies that limit coverage.
Exclusions in General Liability Insurance
Some standard exclusions in general liability insurance include:
One major limit to general liability insurance coverage is intentional acts. If the policyholder intentionally causes harm or damage to a third party, the insurance company will not provide coverage for those damages. This is because insurance protects against unforeseen or accidental incidents, not intentional actions.
General liability insurance typically excludes breaches of contract. If the policyholder fails to fulfill their contractual obligations, resulting in financial losses or damages for the other party, the insurance company will not cover these liabilities. Businesses should have separate contractual liability insurance to address this specific risk.
Errors and omissions arising from professional services are generally not covered under general liability insurance. This means that if a professional, such as a consultant or a doctor, makes a mistake or provides faulty advice that results in financial losses or harm to a client or patient, the general liability policy will not cover those damages. Professionals should obtain separate professional liability insurance, also known as errors and omissions insurance, to protect themselves.
Increasing Coverage With Policy Add-Ons and Umbrella Policies
While general liability policies contain standard exclusions, businesses can extend coverage through optional add-ons and endorsements such as:
- Employment practices liability coverage – Protects against claims such as wrongful termination, discrimination, and sexual harassment.
- Professional liability coverage – Covers errors and omissions arising from professional services.
- Cyber liability coverage – Covers data breaches, network damage, and cyber extortion.
Secure Umbrella Policies for Added Protection
Umbrella insurance policies offer an additional layer of liability coverage that goes beyond the limits of the underlying general liability policies. These policies act as an umbrella, providing higher policy limits to protect businesses against potentially catastrophic claims that exceed the coverage provided by their primary insurance policies.
The benefits of umbrella policies include:
Increased Liability Limits
Umbrella policies provide coverage limits that typically start at $1 million and can go up to several million dollars, depending on the needs of the business. This additional coverage offers companies peace of mind by protecting them from significant financial losses resulting from uncommon or catastrophic events.
Coverage for Various Liability Risks
Umbrella policies cover liability risks such as bodily injury, property damage, landlord liability, and slander or libel. This broader coverage extends to the business operations and personal liabilities of key individuals within the organization.
Legal Defense Costs
Umbrella policies often cover the legal defense costs associated with a claim. This can help businesses manage the financial burden of defending against lawsuits, even if they are ultimately found not liable.
Flexibility and Customization
Umbrella policies can be customized to meet the specific needs of a business. They can be added to existing general liability, auto liability, and employer’s liability policies, providing a comprehensive risk management approach.
Find a Way Forward With NEC Insurance
The NEC Insurance team is dedicated to providing tailored insurance solutions to businesses in Missouri. We understand that navigating the insurance landscape can be overwhelming and complex. With our extensive knowledge and experience, our expert team works closely with you to assess your needs and risks. We consider factors such as the nature of your business, industry regulations, and local laws to develop comprehensive insurance plans that provide stellar coverage.
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NEC Insurance supports Missourians with high-quality coverage for businesses and individuals. We apply over 45 years of experience to help you navigate the market and deliver the policies you deserve.