Why General Liability Insurance is Essential for Small Businesses

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Have you ever wondered what you would do if an employee (or customer) got injured on your business’s property (and then pursued legal action against you)? How would you be able to afford the legal costs? If you’re scratching your head wondering how your business would recover from such an event, you’re not alone.

Countless small business owners neglect their insurance strategies (especially in regards to general liability insurance), while it should be one of their main causes of concern. Many businesses don’t even have a liability insurance policy, to begin with (which ironically is a major liability in itself).

If you need help with understanding general liability insurance for business, this blog post has you covered. Below we go into some of the main reasons why you need a liability policy, as well as some basic information regarding how to find a quality plan for your business.

How Much Will a Liability Policy Cost?

The actual cost of your general liability policy depends on a multitude of factors including industry, business size, revenue, etc. The main factors in determining the cost of a general liability policy are the size of the business, and the area of its operation (i.e. industry).

For example, a financial services company will have a smaller premium than a construction contracting company. Median prices range anywhere from $300 to over $1,000 (per year). Read more about the average cost of business insurance here.

What Exactly Will a General Liability Policy Cover?

This type of business insurance covers any legal claims made against your business (in regards to personal and/or property damage as well as what’s known as “advertising injury”). If your business doesn’t have a liability policy, it might be forced to pay for any associated legal fees out-of-pocket. Unless your business has millions to burn, this isn’t exactly an ideal scenario (in any industry).

Contrary to popular belief, some of the most expensive types of legal claims are actually reputation-based. Some estimates put the average reputation harm claim at up to $50,000. One of the best examples of this is having another business claim that your business damaged its reputation. General liability insurance would protect your business from having to pay any claimants’ legal action(s) against you (which is why it’s absolutely vital to the overall health of your business).

What Would Happen if I Didn’t Have General Liability Insurance?

All of the associated legal costs of dealing with a claim against your business can quickly add up. Attorney fees, court fees, settlements, etc. In fact, the average cost of an attorney is anywhere from $100 to $200 per hour. Times that by however long your case takes to resolve, and you could end up paying close to $100,000 just to settle the claim (which doesn’t even involve payment of the actual claim). Learn more about the associated costs of general liability insurance on this page.

You could easily end up paying hundreds of thousands of dollars, just to resolve one claim against your company. Luckily, this is the exact reason why liability insurance was invented in the first place. See the utility of opening a liability policy yet?

How to Find a Quality Liability Insurance Provider

The internet is without a doubt the most powerful tool when it comes to finding a quality insurance provider nowadays (and this also goes for general liability insurance). There are so many websites that allow you to quickly (and easily) compare numerous companies/policies against each other. But how do you decide which provider to go with?

Choosing the right insurance provider isn’t as simple as it sounds. Just because one company might have a lower price than another, doesn’t make that company better (it just makes them cheaper). It’s generally recommended to avoid going with an insurance provider simply because of their low price. You should also take into account a company’s claims process, as well as their coverage options. You should look for a policy that includes the following coverage types (at a bare minimum):

  • Third-party property damage
  • Third-party personal injury
  • Advertising injury
  • Reputation harm

If a policy/company doesn’t protect you from the different types of claims as listed above, then it’s recommended to go with another company/provider. The point of a general liability policy is to protect your business from the most common forms of legal complaints. Take your time during the selection process, and carefully review the details of each policy before making a final decision.

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