How General Liability Insurance Can Protect You
Contrary to popular opinion, general liability insurance is not another name for public liability insurance. General liability insurance does include public liability coverage in the language of the policy, but they are quite different in terms of scope when looked at separately. While general liability policies protect businesses from third party injury or damage claims, public liability insurance is narrower in scope in terms of who it applies to.
General liability insurance protects your company from claims that might come from other businesses, customers or clients, for instance. It can protect you from liability for making an unintentional oversight or error in the course of service delivery or how your products and services are used by customers or third parties.
General coverage is a bit of catch-all. It covers a wide range of legal claims against you and your business, including litigation from accidents or negligence claims. Think of the classic slip and fall scenario of a customer on an icy sidewalk in front of a store. This would be covered by a general policy.
General liability coverage will usually cover claims related to accidents, including bodily injury, medical expenses, property damage if your business is blamed in the cause, and personal and advertising injury coverage. This means that if someone does have one of those classic slip-and-falls on your property, your provider will cover the cost of their medical bills. Also, if you are accused of libel or copyright infringement from another company, your insurance can kick in to help with costs from a lawsuit by another party.
However, if you offer professional services, you are open to claims of negligence or harm related to the delivery of those services. Perhaps an opinion or research product you provided was incomplete or ended in a recommendation to your client that had unforeseen consequences. If your client uses your professional advice to enact a solution for their company that results in financial or reputational damage, they can turn around and file a lawsuit against you. Your general liability insurance while useful and wide ranging, may not cover you in such an instance and you may need specific professional liability insurance. Which is why you should never look at your general liability insurance as the cure for everything; be sure of what you’re covered for.
Can public liability insurance offer the same protection as general liability insurance?
Public liability insurance policies are often cheaper than general liability insurance, but they carry less coverage and open you up to greater risks. In states where general liability insurance is not mandatory, companies may opt for public insurance instead because of the lower carrying cost of the premiums. And this may make sense if you are not running a storefront and have a lower risk profile of accidents or negligence in service and product offerings.
However, if you have a lot of customer traffic, or offer services that carry a risk of negligence (i.e. professional consulting services where you are giving advice that companies will use to make cost-heavy decisions), then general liability insurance will give you greater peace of mind in operations. Note also that with public liability coverage you will not be covered for claims filed against you or your business by your own employees, suppliers or shareholders. These kinds of lawsuits can also have the same kind of devastating consequences as those filed by members of the public and could lead to a company going out of business.
The long and short of it is that having the proper coverage is absolutely important; it can protect your company from going bankrupt from a lawsuit. When getting started or looking at policy renewals, chat with different insurance providers or brokers to understand what each coverage type will provide to you and what it can specifically mean for the type of company you have. Take this information into consideration based on your risk appetite and ability to carry the cost of premiums.
No matter what type of business you run, a storefront or an advisory firm, general liability insurance can provide you with protection in unexpected situations where you find yourself the subject of a lawsuit but be sure of what is covered. Ultimately, it is always better to protect yourself up front and pay the cost to make sure that you are properly protected in the event of a litigious situation.
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