Liability Insurance For Your Business Explained

General Liability Insurance 101

One of the best ways to effectively protect your business assets from litigation is to carry adequate commercial general liability insurance coverage. Commercial general liability insurance protects your business from damages caused by bodily injury or property damage for which your business is found to be legally liable.

What Does General Liability Insurance Cover?

A typical general liability insurance policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations, and can be offered as a package policy with other coverages such as property, crime, automobile, etc. As a safeguard against liability, general liability insurance enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. General liability insurance policies also provide coverage for the cost to defend and settle claims. Here is more detail about what a typical general liability insurance policy may cover:

  • Automatic Additional Insured – Coverage is provided for written contracts, agreements and permits.
  • Tenants Legal Liability – Coverage for property damage your organization causes to a premises owned by others.
  • Defence Costs – Provides coverage for legal expenses for liability claims brought against your business, regardless of who is at fault.
  • Products Liability – Provides coverage for bodily injury and property damage sustained by others as a result of your products.
  • Medical Expenses – Provides coverage for medical expenses if someone is injured on your premises or by your products.
  • Occupiers and Operations Liability – Provides coverage for bodily injury and property damage sustained by others on your premises or in conjunction with your business operations.
  • Personal and Advertising Injury – Protects against offences made by you or your staff during the course of business, such as libel, slander, disparagement or copyright infringement in advertisements.

How Much General Liability Insurance Coverage Does Your Business Need?

The amount of coverage that your business needs depends on three factors: perceived risk, where you operate your business and the type of products you manufacture.

  • Perceived Risk – Consider the amount of risk associated with your business operations and functions. For instance, if you manufacture heavy machinery, you would generally need more coverage than another organization that manufactures stuffed animals.
  • Premises and Operations Liability – If you operate in a province or area that has a reputation for rewarding high damages, then you may wish to purchase higher limits of liability.
  • Type of Product Manufactured – If you manufacture a dangerous product, you may want to carry higher limits of liability.

Remember, you can purchase an Umbrella Liability policy to help achieve the desired limit of liability.

Other Ways to Protect Your Business, In Addition to General Liability Insurance:

  • Establish a high standard for product quality control at your organization.
  • Keep all company records up to date and accurate.
  • Train your employees thoroughly and properly.
  • Ask an ALIGNED Insurance Broker for safety and compliance information.

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