General Liability Insurance: What It Is and Why Your Landlord, Client, or Vendor Requires It
Starting a new business? Signing a lease for a commercial space? Just landed a major client? If so, chances are you'll need general liability insurance to meet the requirements of your landlord, client, or vendor. But beyond simply fulfilling a contractual obligation, general liability (GL) insurance is one of the most crucial forms of protection for any business owner.
What Does General Liability Insurance Cover?
At its core, general liability insurance protects your business from financial loss due to certain claims brought against it. Here’s a breakdown of what it typically covers:
Property Damage: Covers damage to property for which your business is legally liable, including damage to rented or leased space.
Bodily Injury: Protects your business if someone (other than an employee) is injured due to your operations, products, or premises.
Medical Payments: Covers immediate medical expenses if someone is injured during the course of your business operations or while on your premises.
Defense Costs: Pays for legal defense costs if your business is sued, regardless of fault.
Personal & Advertising Injury: Protects your business against claims of slander, libel, or copyright infringement related to your advertising (note: professional services require separate coverage, like professional liability insurance).
Why Is General Liability Insurance So Important?
Even if you’re not legally required to have GL insurance, it’s a smart investment for any business. A single incident—whether it’s property damage, a slip-and-fall accident, or a false claim of slander—can lead to costly lawsuits. Without insurance, the financial burden could be devastating, potentially even bankrupting your business.
That’s why most landlords, clients, and vendors insist on it. They want to ensure that any risks associated with your business operations are properly covered, protecting both you and them from potential legal disputes.
Specialized Forms of Liability
Depending on the nature of your business, you may need a more tailored form of liability coverage. Here are a few examples:
Contractors’ Liability: Designed for contractors like plumbers, roofers, and electricians who face risks specific to their trade.
Professional Liability: Also known as Errors & Omissions (E&O) insurance, this is crucial for service-based professionals such as architects, videographers, and consultants. It covers claims of negligence or failure to provide the expected level of service.
Products Liability: If you manufacture, distribute, or sell products, products liability insurance protects you from claims that your product caused harm or injury.
Protect Your Business
Even if you’re a small business or think the risk is minimal, GL insurance is vital. You never know when an accident, injury, or lawsuit might arise. Ensure you have the coverage you need to keep your business safe and compliant.