There probably isn’t a more misunderstood type of business insurance than general liability insurance.  Many business owners think that they can collect a handful of general liability insurance quotes, pick one and they’re covered for all types of claims.  This simply isn’t true and the time to really understand the claims coverage limits of your general liability policy is not when you have a claim that’s denied.

To better understand a general liability policy, let’s look at what’s typically covered with other types of business insurance, what is actually covered by a general liability policy and how to eliminate gaps in your overall insurance coverage.

You should know in advance that insurance carriers are in the business of making a profit and reducing their risk, which isn’t always in your best interests.  Insurance agents that only work with one insurance carrier are focused on placing your company into a policy that’s best for them, first and foremost.

If you want an insurance agent that works first for YOU, let’s have a conversation.  We aren’t aligned with any one insurance carrier, so our focus is on finding the most cost-effective general liability, worker’s compensation and/or health benefits provider for you and your company.

As a general broker, we make the insurance carriers fight for your business, eliminate extra costs associated with policy add-ons that you don’t need and on finding the carrier that knows your industry and covers you with the best possible policy and rates.

All business liability insurance is focused on three key areas- bodily injury, property damage, and legal defense.

Bodily injury includes medical payments anytime someone other than your employees is injured and makes a claim against your company.  Bodily injury coverage does NOT extend to your employees, as they are covered by Workers’ Compensation insurance and/or your commercial vehicle insurance policy.

So, if a worker is injured on your job site or at a customer location, they are covered by your worker’s comp policy.  However, if they are injured in a vehicle accident that occurs when they are traveling from one customer location to another, they are covered by your commercial vehicle policy.

These policies do not typically cover workers who are commuting to or from your worksite, office or shop.  In the case where an employee is injured as the result of a vehicle accident during their normal morning commute, they would file a claim with their own auto insurance provider, not you.

Legal defense is exactly what it sounds like- the costs associated with processing and, sometimes, fighting a claim that is suspect.  With general liability insurance legal defense coverage, the insurance company is responsible for hiring and paying the investigators, attorneys and support staff who defend you against lawsuits.

Property damage coverage pays for damage to vehicles, structures, landscaping, tools, materials and other physical objects that might be damaged in the course of your work.

If you are totally confused, we should have a conversation so that we can help you navigate.  If not, keep reading, but it’s about to get more complex.

All general liability insurance policies have limits on how much coverage they provide.  The cost of your general liability policy will be a calculation based on the combination of your previous claims history, the amount of coverage (limits) that you want, the amount you’re willing to pay out-of-pocket (commonly known as your deductible) and the industry that you work in.  

The higher the amount of coverage you want, the higher the premium will be for your general liability policy.  And, if you work in an industry that the insurance providers consider “high risk,” your costs will be higher for the same coverage offered to a low-risk company.

And, all insurance policies have maximum coverage limits, per claim and per year, including punitive damages that might be awarded should a claim lawsuit be settled in court.  Punitive damages are the amount above and beyond actual damages that a judge or jury might award a party to a lawsuit.

But, general liability insurance has other limits that you need to be aware of.  Most GL insurance policies exclude coverage for things that are or should be covered by other types of insurance.  The complexity of exclusions is where a broker like us can truly help you sleep well at night because we are able to stitch together several types of policies, often with a little overlapping coverage, that will cover you and your business in the best possible way.

Let’s look at some of the other common commercial insurance types so that you can start to see how they are different and why only having a general liability insurance policy likely leaves your business exposed to claim-related lawsuits that you don’t have insurance coverage for.

Commercial liability insurance (CGL) is a broad type of general liability policy.  It will often have a higher cost and fewer exclusions than a regular general liability insurance policy.  With a commercial liability insurance policy, you’d normally be covered for general business claims. But, to be clear, CGL does not protect you from every type of claim or lawsuit.  No single insurance policy does.  

CGL should also not be confused with umbrella liability insurance.  CGL has broader coverage then general liability insurance and umbrella liability insurance has broader coverage then a CGL policy.

Then, there is Professional Liability Insurance (PLI).  PLI covers you in the event that you make a mistake on a job, by omission or commission.  Professional liability insurance is also known as “errors and omissions” insurance.

For example, if you make a mistake in the design of custom work that you do, this would likely be covered by PLI, but not by your general liability insurance policy.

Commercial auto insurance, or commercial vehicle insurance, is used to protect you against bodily injury or property claims arising out of the operation of company vehicles.  This type of insurance is costed based on the number and type of company vehicles that you want to be covered. A commercial auto policy will often set expectations related to the age and driving history of the employees who can or cannot operate company vehicles.

As a simple example, minor age employees are frequently not covered by a commercial vehicle insurance policy.  

If you allow customers to operate company vehicles, as would be the case if you rented cars, trucks or equipment, your commercial auto insurance policy will likely exclude these drivers and expect you to confirm that they have their own vehicle coverage or buy coverage from a specialty insurance company that handles rental vehicle drivers.

The personal advertising injury section of a general liability insurance policy outlines specific events or offenses that are also covered with your general liability insurance policy.  Some examples of these include:

• Malicious Prosecution - This is simply a lawsuit without cause.

• Wrongful Eviction - If you’re a landlord or property owner evicts you outside of the legal requirements for doing so.

• False Imprisonment - This can be as simple as someone locking an office door and not allowing someone else to leave.

• Slander & Libel - creating public information that has no basis in fact.  Libel is written and slander is verbal. So, if a competitor starts posting on social media falsely that your product is dangerous, this is libel.

• Copyright Infringement - if a competitor uses material that you own a copyright to, they are infringing on your copyright.

• Copying Advertising - if your advertising has a very unique (uncommon) design or color scheme and a competitor starts using the same design, this is typically covered.

We understand that you didn’t start your business as a pessimist or to sit around worrying about who is going to sue you and for what.  It’s our job to understand your business and to recommend the best liability insurance policy for you.

This means combining our decades of insurance experience with your knowledge of how you do what you do and crafting insurance coverage that gives you piece of mind while also meeting or exceeding any legally required insurance types, such as worker’s compensation.

We work for you, not the insurance carriers and we’re here to help.  If anything in this article was confusing, if you’re starting a new business or if you just want to confirm that you have the right insurance coverage at the best price, let’s connect.

The thousands of business owners we work directly with are happy we did.