Contractor Liability General Liability Insurance Quote Page

Understanding General Liability Insurance

In today's litigious society, even small mishaps can result in large lawsuits. That's why
general liability insurance, along with property and worker's compensation insurance,
are essential for most companies. Liability insurance protects the assets of a business
when it is sued for something it did (or didn't do) to cause an injury or property
damage.

General liability insurance can be purchased separately or as part of a business-owner's
policy (BOP). A BOP bundles property and liability insurance into one policy; however,
the liability coverage limits are generally pretty low. Businesses that need more coverage
usually purchase liability insurance as a separate policy. The amount of coverage a
business needs depends on a couple of factors:

- Perceived risk. Business owners should first consider the amount of risk associated
with their business. For example, a business that manufactures heavy machinery is at a
greater risk of being sued than a company that manufactures linens, and would
therefore need more liability insurance.
- The state in which you operate. Businesses that operate in states with a history of
awarding high damage amounts to plaintiffs typically need to carry liability insurance
with higher coverage limits. An insurance broker can offer guidance in this area.

How General Liability Works

Under a general liability insurance policy, the insurer is obligated to pay the legal costs of
a business in a covered liability claim or lawsuit. Covered liability claims include bodily
injury, property damage, personal injury, and advertising injury (damage from slander
or false advertising). The insurance company also covers compensatory and general
damages. Punitive damages aren't covered under general liability insurance policies
because they're considered to be punishment for intentional acts.

General liability insurance policies always state a maximum amount that the insurer will
pay during the policy period. Usually these policies also list the maximum amount the
insurer will pay per occurrence. For example, if a company has a $1 million occurrence
cap in its liability policy and it's successfully sued for $1.5 million, the insurer would pay
$1 million and the business would be responsible for paying $500,000.

To cover these types of situations, many companies purchase umbrella liability
insurance, which picks up where their general liability coverage ends. Umbrella liability
covers payments that exceed their other policy's limits, and provides additional coverage
for liabilities not covered in a standard liability insurance policy.

Most insurance companies require their policyholders to report as soon as possible any
accidents that could lead to a liability claim. The insurer may then require the business
owner to document the situation, forward all summonses and legal notices, and
cooperate fully in any investigations.

Taking precautions before an accident can help keep your liability and insurance rates
down. All businesses can take certain steps to lower the chance of a liability insurance
claim:
- Set a high standard for product quality control
- Make sure all company records are complete and up-to-date
- Be sure employees are properly trained
- Get safety tips for your type of business from your insurance company