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How Commercial Business Liability Insurance Works for Your Company


Businesses will want to investigate general liability insurance to protect themselves. But what is general liability and how should you determine if it’s for you?

Here’s how it works:

If a business is sued by a third party who claims the company caused damage to their property or physically injured them this coverage would protect the company. Also, a general liability policy will typically cover product liability, which is crucial for product-based businesses that could potentially be sued because their product harms someone. Lastly, the policy would cover personal and advertising injury if an ad campaign or marketing material generated a lawsuit for libel or slander, amongst other things.

If your company is sued for any of the above reasons, your general liability policy will cover the costs of defense attorney’s fees, and any settlements or awards if a lawsuit is judged against the company. For most commercial general liability policies, defense or attorney fees are unlimited and will not erode the limit of liability listed on the policy declaration pages.

Now that you have a better understanding of how general liability works and what it covers, here are three common company use cases for purchasing commercial general liability insurance for your business or startup:

1) You are Signing a Lease.  Most landlords require that companies carry general liability insurance and will specify the limits in your lease. It is important to work with an insurance broker who will review your lease and can provide quotes based on the limits the landlord is requiring so that you can budget accordingly.

2) You are Launching a Product.  Once your product is in the hands of the public, you have little control over how consumers will experience it. For example, in 2017 a woman filed a federal class-action lawsuit against food manufacturer Jelly Belly for purportedly deceiving her about the sugar content of its product despite it being clearly labeled on the package.

3) You are Signing a Client Contract.  Many times, clients will require companies to have specific types of insurance coverage and limits. Almost always, one of those requirements is general liability. When companies sign contracts with vendors they want to make sure the vendor is properly insured in case anything ever goes wrong.

To summarize, general liability insurance covers the defense costs for many potential worries companies could face, including the chance a class action lawsuit is filed against your business alleging misleading advertising, or when a client wants to ensure your business is properly insured before they sign on.

Depending on your type of business, and the types of risks your company could run into, you may need additional liability insurance that is not part of a commercial general liability insurance package. If your needs are different, or if you just want more knowledge regarding business liability insurance, talk with The Cody Group NY about the types of coverages that you may need.

Dominic Piccirillo