Why does my small business need general liability insurance?

Small business owners have spent a great deal of time, energy, and – in all likelihood – money establishing their organization. That’s why a small business needs general liability insurance – because every business needs coverage in case something goes wrong. The simple fact is that even a relatively minor accident or mistake could lead to legal action that can have devastating consequences for a small business.

What is small business commercial general liability insurance?

In simple terms, it’s business insurance that will cover the costs associated with legal action resulting from bodily injury or property damage affecting a third party. In other words, it covers a business that’s sued in the event its actions a) cause someone to become hurt, or b) result in someone else’s assets being damaged.

If such a scenario sounds unlikely, that’s because it is – but it’s simply impossible to rule out. Imagine, for a moment, that someone visits your small business’s office and, on the way in, they slip on ice, a spilled fluid, or even a banana peel. Should they become injured or have expensive equipment damaged, there’s a chance they could sue your small business. This is when a small business needs general liability insurance.

The keyword in the term ‘general liability insurance is “liability”. The word refers to responsibility, which is something any small business owner takes upon themselves for their business operations, including individuals who come to work for them or visit their property. Simply establishing a small business exposes the business owner to a range of serious liability risks. Should these risks result in a lawsuit, it could have devastating financial consequences for the small business in question.

Legal costs can be devastating for small businesses

Consider that, in most cases, a lawsuit will take months, even years to resolve. Over the course of that time, a small business could rack up significant legal costs as lawyers are paid to fight the lawsuit in court. Then there’s the time, energy, and stress that comes with having to defend a small business against such a lawsuit.

Much of that can be effectively managed by simply registering your small business for commercial general liability insurance. For most small businesses with modest staff sizes and properties, the cost of commercial general liability insurance is very manageable – certainly more manageable than a lengthy lawsuit.

But what if my small business is in my home?

Some small business owners decide against acquiring commercial general liability insurance because they run their business out of their home and have a home insurance policy. And in some cases home insurance can cover some of the liability associated with running a small business if your insurance company has confirmed this to you in writing. However, most personal insurance companies explicitly exclude any sort of business liability – in fact, if a client visits your home and becomes hurt or has their property damaged, your small business may not be covered in the event that client files suit.

For that reason and many others, it’s important for all small business owners, even those who run their business out of their home, to acquire comprehensive commercial general liability insurance starting on day one.

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