We hear the term general liability, we likely think it refers to general liability insurance. We know we need this coverage if we want to run a successful business. But what exactly is general liability?
Liability is a term that refers to being responsible for something, particularly in legal matters. It has a second meaning as well. In this second meaning, liability is a person or a thing whose mere presence creates an increase of risk.
The insurance angle of liability covers both these definitions. When you run a restaurant, you have liability in the sense that you will be held responsible should something happen within your four walls. And your restaurant itself is a liability, in the sense that it introduces a new set of risks for you to manage.
All insurance, in some way or another, is a kind of liability coverage. When we buy coverage, we're covering all those what ifs that we invite by driving a car, owning a home or running a business.
General liability insurance is so named because it covers general risks. You buy collision insurance to cover your car against collisions, you buy flood insurance to protect your home or building from flooding, and you buy general liability insurance to cover against the broad assortment of bodily injuries and property damage that may result from your business’s actions.
In other words, general liability insurance can provide protection in the event that your business is held responsible for injuring a third party or damaging their property. If you are sued or otherwise held responsible for such damages, your general liability insurance can help pay for the damages—that is, up to the limits specified on your policy.
Nevertheless, keep in mind there are multiple general liability insurance exclusions. In particular, such coverage does not apply to instances of professional negligence, employee injuries or other specific losses suffered by your business. Oftentimes, if another form of commercial insurance can protect against a liability-related loss (e.g., professional liability coverage or workers’ compensation coverage), general liability probably won’t cover it.
In any case, general liability insurance is a valuable form of coverage for any business. Consult your trusted insurance agent for more information on this type of insurance and how to tailor your policy to meet your business’s unique needs.