sIf you have a business location, whether it be an office or a storefront, the chances are that you have some premises liability risk. From customers tripping in your parking lot to an item falling on a customer - things happen.. and they occur in unforeseen ways.
The good news is that these unforeseen events don't have to keep you up at night. It is most likely covered under your commercial general liability (CGL) insurance policy.
Before we can dive into what premises liability insurance is, we should explore what you are liable for.
What are you responsible for on your premises?
The extent of a landowner or leaseholder's legal responsibility or duty to a person entering their property will generally depend on the legal status of the person on the property.
Visitors are typically classified as either invitees, licensees, or trespassers.
Going from the highest level of responsibility (duty of care) to the lowest is as follows:
1. Invitee - A person who comes on to the property with permission for the owner's purposes. A duty of reasonable care (acting as a reasonable person in the same circumstances would) is generally owed to the person or customer.
2. Licensee - A person who comes on to the property with permission for his or her own purposes. (In some circumstances, this permission might be presumed by the failure to exclude someone from one's property intentionally). At a minimum, a duty to warn of hidden dangers is usually required.
3. Trespasser - A person who comes on to the property without permission. A duty to avoid willfully or wantonly injuring the person is typically required.
Although implementing good risk management strategies can help prevent issues of liability, the reality is that liability usually cannot be prevented in its entirety.
What does a premises liability insurance cover?
Liability for bodily injury (such as an injury due to a fall in a parking lot) typically would be covered under the commercial general liability coverage subject to policy terms and conditions.
The primary premises liability coverage can be found under these coverage parts in your general liability policy:
General Liability - This liability coverage will pay for covered claims of bodily injury or property damage that are made against your business. The loss must arise out of negligent operations or maintenance of the premises.
Medical Payments - This coverage provides payment for medical expenses regardless of negligence or fault. It covers expenses for people, other than employees, who sustain a bodily injury on a property you own or rent or bodily injury arising out of your operations or activities. You can find your medical payment limits on your declarations of insurance. Most of the time it is $5,000, $10,000, or $15,000 per person.
Business owners should note that medical payment coverage typically does not apply to individuals who are trespassing onto the property. Of course, whether a claim is covered can only be determined at the time an incident takes place in conjunction with policy terms, conditions, limits, and any applicable exclusions.
Examples of Premises Liability Claims
1. Retail Store Slip & Fall - As a retail store owner, you have customers in and out of your business all the time.. your business relies on foot traffic to make a profit. Unbeknownst to you an item has fallen off the shelving and a customer slips on the item. The customer suffers from a concussion and accrues $16,000 in medical bills.
2. Landlord Premises Liability - You have taken the extra precautions to protect your building. You have recently installed fire sprinklers to protect your property in the event of a building fire. These fire sprinklers malfunctioned and ruined a large portion of your tenant's property resulting in $100,000 worth of property damage.
3. Hiring Independent Contractors - You run a company that utilizes independent contractors or subcontractors to meet the needs of your clients. They oftentimes use your office or place of doing business. One of your independent contractors sits one one of your chairs resulting in a break. They fall out of the chair and break their arm. Since independent contractors are not employees and are not covered under workers compensation, their resulting $5,000 in medical bills will be claimed under your premises liability policy.
Tips for reducing premises liability accidents
To exercise best practices, business owners may want to consider inspecting for and correcting dangerous conditions on their property. This will help prevent injuries from occurring in the first place.
If any defects or potentially dangerous conditions cannot be corrected immediately, warning signs or markers should be placed to call attention to the conditions.
To determine the exact duty of landowners in your state, you should consult with a local attorney.
Chances are your business has a premises liability exposure, but it doesn't mean that it needs to keep you up at night. Liability arising out of your physical premises can be mitigated and controlled. Contact us if you have questions about premises liability or if you want to review your premises liability insurance policy.