The majority of you are aware of several insurance policies such as workers’ compensation, inland marine insurance, builder’s risk, and, last but not least, general liability insurance. These insurance policy coverages are combined with being a part of a group known as contractor insurance. Contractor insurance incorporates all these policies that cover the contractors against unforeseen damages such as liability, property damage, bodily injury, etc.
Certain business risks are common to construction businesses as opposed to any other industry, such as the hospitality or fashion industry, and that is why the term contractor insurance is used for the insurance that benefits contractors in protecting their security as well as rights of doing business in the industry with ease.
Even though every insurance that comes under a contractor insurance policy holds benefits and security that are required for the businesses, general liability insurance is the most important among them all as it covers negligence, including third-party body injury, property damage to the third party, and other such lawsuits. If you, as a business contractor, have to face a case in your career, then all the legal defense you will be required to pay will be reimbursed under the general liability insurance by the insurance company.
What do you understand about general liability insurance?
Liability insurance is a crucial part of the insurance plan. As the name suggests, it covers all the general liabilities and protects the business if it falls prey to any claims such as property damage or bodily injury. Another name for general liability insurance is commercial general ability insurance or CGL. A question asked by several business owners is what is general ability insurance, and do you need it?
General ability insurance can be bought as a standalone policy or a bundle with combined coverages, such as a business owner’s policy. Let’s discuss the actual coverages of general liability insurance.
What areas are covered under a general liability insurance policy?
All the costly claims that can arise anytime during your normal business operations can be quite expensive to pay by your pocket as many small business contractors may not have enough capital to reimburse the payments by themselves, and that is when general liability insurance comes in handy as it covers all such operations with appropriate resources preventing you from feeling burdened that can negatively affect your business.
A general liability insurance policy covers all such claims caused by your business, including you or your employees. Some of them are mentioned below:
- Bodily injury caused to a third party. If a customer or a bystander gets hurt by tripping, slipping, or falling in your store, they can file a lawsuit against your business that can cause you to pay them compensation and their medical expenses. A general ability insurance policy will help you suffer the laws by providing the reimbursement cost to the third party, including their medical bills.
- Property damage caused to a third party. Suppose your business involves your employees working at a client’s house. In that case, your company has a considerable risk of causing property damage to the third party leading them to file a complaint against your business. The general liability insurance policy covers the repair or replacement cost of the property damage caused to a third party during your business operation.
- Third-party reputational harm. People can sue your company for something you or your employees have said that they do not like. In such cases, the general ability insurance will help you cover your legal cost to defend yourself and your business. When you are involved in a business, you must deal with all customer types.
- Advertising injury. If your business mistakenly violates any copyright at any point in time, then the company or organization you have offended can hold your trade for copyright infringement. For example, suppose you use any protected or owned photograph without the photographer’s permission in such cases. In that case, you can suffer legal actions that can only be helped with your liability insurance policy.
Some insurance coverages are not covered under general ability insurance. Some of them are as follows:
- Illnesses sustained by employees or work-related injuries are not covered under liability insurance but are protected under workers’ compensation insurance. With the help of workers’ compensation insurance, you can help pay their medical expenses and care costs.
- The mistakes you made in your professional business services are not covered under liability insurance. Instead, they are protected by professional ability insurance.
- If your business property gets damaged, such a cost will be compensated by commercial property insurance, not general liability insurance
- The insurance policy of general liability will also not cover the intentional acts done by you or your employees in anger or excitement. For example, if you throw a company’s computer out of the window, the act will be considered deliberately wrong and will not be compensated by any insurance policy
Types of Liability Insurance
There are different types of liability insurance other than general liability insurance that you can get according to the needs and requirements of your business. Some of this insurance are as follows:
- Commercial umbrella insurance provides additional coverage on top of your existing liability policies to compensate for expensive claims.
- Employment practices liability insurance helps you cover your legal defense costs, judgments for settlements, and other expenses related to the court if a former employee files a lawsuit against you claiming to have faced harassment, discrimination, or wrongful domination.
- Another such insurance is management liability insurance, which helps protect your business’ officers and administrators from claims against them
- For the protection of you and your employees on the road, commercial Auto Insurance is what you need
What insurance do you need for your small business?
General liability insurance is necessary for any small business insurance policy. However, when combined with many other financial coverages, it will significantly support your business’s financial condition. Additional coverages to protect your company against fire, theft, vandalism, natural disaster, and lost income risks combined were the general ability insurance to provide a complete shield to your company organization that will help you protect The authenticity and right of your business.
You can start with the business owners policy or BOP, which provides a bundle of general ability insurance combined with commercial property insurance for all the available coverages you need to protect a small business or enterprise. It costs comparatively less in combination if you buy it separately; therefore, it is the first choice of every business owner.
Why do you need General Liability insurance?
Liability claims are uncommon, and you cannot skip or ignore them in the hope of not having to face them. Unless you do not have enough capital and financial stability to support yourself in a lawsuit and are burdened by the fees and compensation from your pocket, it is a wise option to protect your business’s financial security with a general liability insurance policy.
The average cost of a third-party damage or injury claim could be as high as $35,000, and in case it leads to a lawsuit, the average price can increase to as much as $75,000 to defend yourself and settle the situation. Paying all these costs from your pocket or the business earnings can lead you to a depressing Financial debt or even out of business.
Also, many companies require proof of insurance to work with other businesses, and in such cases, a certificate of liability insurance is necessary to expand your network wider. Here are some benefits that come along with the business liability insurance coverage for you to take a look at:
- Protection of your business if it is open to the public clients or vendors
- Advertising security and smooth marketing material creation
- Safety of using a third-party location for business activities and operations
- Assurance of working with temporary employees
- You will be able to easily collaborate with other businesses with the help of your insurance coverage
Is your business a fit for general liability insurance?
If your business falls under any given category, you must buy general liability insurance for its protection.
- Landscaping companies
- Marketing firms
- IT consultants
- Small business owners
- Artisan contractors
- Janitor contractor
- Real estate agent
Is it compulsory to get general liability insurance by law?
Business liability insurance is not compulsory or required to obtain by the law. Still, your business is left open and vulnerable to avoid potential damages that can cause you to have tilled and leave you bankrupt within some time. And that says it all about the importance of general liability insurance.
General ability coverage you need
Most small business owners choose the standard coverage amount of $1 million per occurrence with a $2 million aggregate policy limit for their general liability insurance coverage. This policy pays up to $1 million to cover any public liability insurance claim with a limit of $2 million for all the shares during the policy period. This type of policy is typically due in a year.
The cost bar for General Liability Insurance
The average cost of general ability insurance is $42 a month. It can also be less than that because it depends on the insurance company or providers and many other factors. The cost of general ability insurance also depends on your business size, industry location, and the coverage you need for your business protection.
Insurance policies such as general ability insurance are the best. They can be tailored and customized to meet your perfect business requirements without having you pay the extra cost for the coverages you do not need. You can combine different insurance policies under the umbrella of a business owner’s policy which is the convenient and cost-effective way to include the necessary insurance, such as business property insurance and workers’ compensation, in a single item that will cost you much less than buying every coverage separately.
Some deciding factors for the cost of general ability insurance are given as follows:
- The type of business. If your business involves a high-risk market, you will have to pay higher cause for general liability insurance as the security will be increased.
- The size of your building and its location and condition will affect the size of your coverage requirements, eventually, the cost.
- A business’s years of experience may affect the policy’s cost.
- Details of the policy, such as deductibles and coverage limits, including the previous insurance claims of your business, all affect the cost of the insurance policy
Why should you consider getting a contractor’s policy instead of separate policies?
Our concern comes down to a single thought when explaining to you about choosing the right insurance: your coverage should never be too much or too little. Similarly, the rates of your insurance policy should be comprehensive, which only happens when you buy coverage policies in bundles.
Buying contractor insurance can help you save a lot of money with given peace of mind as it combines all your required coverages into a single bundle that serves its purpose rightfully and proves helpful for your business requirements without selfishly seizing your pocket.
Have more questions? Ask Commercial Coverage Plus!
We hope the guide has provided you with all the necessary information and that you can clearly understand contractor and general liability insurance. However, suppose you still have some questions. In that case, expert professionals at Commercial Coverage Plus are always ready to guide you through all the procedures and paths, leading you to get the right insurance policy to protect your business assets.
Contact us for the proper assistance and guidance through general liability coverages and contractor insurance at the most economical prices.