Purchasing business insurance can feel a little confusing, especially if you are new to it. This is normal. Since many first-time commercial insurance buyers are used to dealing with home and auto insurance, the complexity of commercial general liability can be a little frustrating.
With a little preparation and research, you’ll have a better understanding of the policy and ultimately get a better price on your insurance. Here is what you need to know:
What is general liability insurance?
General liability is one of the most common insurance policies that businesses purchase. It provides financial protection against many common legal liabilities or lawsuits that you might face as a business owner.
To understand what information you need to provide in order to receive a general liability insurance quote, it helps to know what is covered under the policy.
Every question underwriters ask is designed to help them understand how your risks fit within the general liability coverages. Here are those coverages:
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What General Liability Covers
Premise Liability/Public Liability
Premises and public liability coverage provides financial protection from liability arising out of your business interacting with the general public. This “interaction” is usually when customers come onto your premises (or your employees go to a customer's premises) to conduct business.
Whether you’re a manufacturer, soap maker, or restauranteur, you are providing a product. And if you make a product and sell that product to a customer, you have a products liability. The commercial general liability insurance policy will cover the risks of your products harming your customers (or any third party) as they consume or use your product.
Completed Operations Liability
This coverage protects you from liability arising out of completed work that your company has performed and finished. The most common use of this coverage is in the construction industry, where a contractor might complete a plumbing, electrical, or similar project at a customer’s location.
After the project is completed, your liability isn't free and clear. If there is a problem with your work and the problem causes harm to your customer, you will be on the hook for the financial repercussions. Completed operations liability addresses this issue by providing coverage for any property damage or bodily injury that you cause after a project is completed.
The commercial general liability insurance policy covers things like libel and slander in the "personal and advertising injury" limit. This coverage can be a big asset to businesses that are running advertisements against competitors, interacting with customers via social media, and the like.
General liability insurance provides coverage for accidental copyright infringement if you were to wrongfully use copyrighted material while conducting business (e.g. sales brochures, websites, advertisements, etc.).
Medical payments coverage helps pay for medical bills arising from bodily injury, regardless of your liability or negligence. One of the most common uses of medical payments coverage is if a customer slips and falls on your premises, the medical payments limit will help pay for minor medical bills without the hassle of proving legal liability.
Legal Defense For Covered Claims
If you get involved in a claim that is determined to be a covered situation, the insurance company will provide you with a legal defense team to assist with handling the lawsuit. This is one of the primary reasons why many businesses purchase commercial general liability insurance. The policy will pay for legal defense costs, regardless if the claim in valid or not.
What General Liability Doesn't Cover
Damage To Your Property
Commercial general liability insurance only covers damage you cause to others' property. It does not cover damage to property that you own, regardless of who damaged the property. This coverage would be found under a commercial property insurance policy.
Injury To You Or Your Employees
There is no coverage provided under the general liability policy for injury to an owner or employee, even if you are sued and held liable for that injury. For this coverage, you will need a workers compensation policy.
When do businesses need to purchase general liability?
When Required By Law
Some businesses purchase general liability insurance because their state requires it to obtain or renew a business license. This requirement is usually for licensed professions, such as certain construction trades, beauty salons, to even home health care agencies.
To Conduct Business
Most businesses, especially if they deal with other businesses or large vendors, will need a certificate of liability insurance to start a project, get a loan, or initiate a business relationship.
To Protect Owners & Employees
When a business reaches a certain point of maturity, it begins to generate significant income for the owner. Additionally, employees of the business rely on that prosperity to pay their bills. Business insurance takes some of the uncertainty away from running a business. For example, a fraudulent (or real) slip and fall won’t send the company into financial hardship or bankruptcy due to a drawn-out legal battle.
What information do I need to get general liability insurance?
Now that you know what general liability insurance does and does not cover, and why businesses generally purchase this coverage, here is the information you should be prepared to provide to underwriters when seeking a general liability quote.
Business Contact Information
The first thing an insurance company or insurance broker will ask is some basic information about your business. You will need:
Business Entity Name
Primary Contact's Name
Primary Contact's Email & Phone Number
Business & Mailing Address
Business FEIN Number
The second type of information insurance companies need to provide a general liability quote is the industry classification code(s) for your business.
For many businesses, this is not an easy task, so it is important to have a brief, but detailed description of exactly what you do. For example, if you are a painting contractor, make sure you know what percentage of your work is exterior versus interior painting projects.
General Business Details
Here is where you need to start providing details on the experience and history of your business. Most insurance companies will ask:
Year company was founded
Owner's relevant experience
Number of full-time and part-time employees
Number of business owners
Once the insurance company understands a little about who you are, your experience, and your operations, the next set of questions will be used to calculate the premium amount by determining the size of your business. For this step you will need:
Estimated gross revenue
Payroll for all employees (excluding owners)
Additional Supplementals For Higher Risk Businesses
Suppose your business is larger, or you need to seek quotes from excess and surplus insurance companies due to the industry that you are in. In that case, you might need to fill out an additional supplemental with very specific and detailed information about how you conduct business, and specifically what type of work you are performing.
How much does general liability insurance cost?
General liability costs can vary greatly from business to business, depending on size, industry, and risk management procedures.
Most policies start at $350 and can go well over $100,000+ for larger or high-risk companies. For a quick indication on what your general liability premiums could be, you can get an instant price via our website or speak with one of our experts.