General Liability Insurance: What Does it Cover?  

What is general liability insurance? Do you need general liability insurance if you are a small business? What does general liability insurance cover for contractors? Many small business owners ask these questions when trying to best understand how to protect their business interests.

General liability insurance is for consultants, employees, consumers, contractors, and the business itself, making it very versatile and practical for large and small businesses.

What Is General Liability Insurance?

General liability insurance helps protect your business assets. It covers legal costs, damages, or settlements up to your policy’s limit for covered claims. It can be described as a “catch-all protection” and keeps your business legally protected from false claims, malfunctioning products, or other damages brought on by your company. 

Whether intentional or not, damages and bodily harm caused by your company are covered by general liability insurance. If your product harms a customer or client, the general liability insurance will help front the legal costs if the affected individual files a lawsuit. An example of good general liability insurance is for electrical contractors, as the danger inherent in their work can accidentally cause bodily or property damage.

But general liability insurance is not just for electrical contractors. Independent contractors need general liability insurance, as well. General liability insurance for your business covers employees, consumers, and any third party working for or with your business. 

What Does General Liability Insurance Cover?

What does general liability insurance cover for contractors, employees, consumers, and the rest? There are many different levels of general liability insurance, but most cover the following:

Claims of Bodily Harm

For many businesses, there is some level of risk. Consumers can be hurt or suffer damage when conducting business with or through you. General liability insurance can help cover the financial strain of a lawsuit in such a situation, depending on your coverage.

For bodily harm to a consumer, it can happen at the place of business. Or the product or service can damage them later, such as faulty electrical wiring or improperly installed plumbing fixtures.

Claims of Libel or Slander

Libel is when you defame a person or entity through the written word, whereas slander is defamation through speech. General liability insurance protects your business from other businesses or individuals claiming that your product or service resulted in defamation.

An example of libel protection would be if one of your advertisements or slogans led to the defamation of another business, either through bad publicity or negative financial growth. General liability insurance would help cover some legal costs, strengthening your business without paying large sums.

Claims of Property Damage

What does general liability insurance cover for contractors, consumers, and employees concerning property damage? If one of your employees, contractors, or products causes property damage, general liability insurance will help alleviate the financial costs should a consumer file a lawsuit against your company.

In the end, your company should have general liability insurance to cover employees, business consultants, contractors, and consumers, regardless of size, to help protect your investments, assets, and financial well-being should an incident lead to litigation.

Is It Legally Required to Have General Liability Insurance?

No law requires businesses to get general liability insurance. However, successful companies know the benefit of alleviating unexpected costs, especially when the matter becomes part of legal action.

After all, it only takes one bad fall on your property or one injury from defective products or services to throw your company into a financial tailspin — or at the very least, significantly affect your financial growth. This type of insurance is especially important for new businesses that might not have the money or resources to afford a lawsuit against them.

Plus, general liability insurance for your contractors, employees, and customers, eases the flow of business — as incidents or lawsuits can be covered by your general liability insurance policy.

What Does General Liability Insurance Not Cover?

What does general liability insurance not cover for contractors and their businesses? General liability insurance does not cover specific incidents of liability or damage, such as:

Auto Accidents

If one of your fleet vehicles or drivers causes an accident, it would not be covered under your general liability insurance. Auto accidents fall under a different type of insurance called a commercial auto insurance plan.

Employee Illnesses

General liability insurance does not cover an employee getting sick or hurt on the job. Worker’s compensation insurance typically covers that.

Illegal Actions

Illegal actions performed by your company, employees, or representatives, intentional or otherwise, are not covered by general liability insurance. 

Damage to Your Own Property

If a product damages your property, it is not protected under general liability insurance. You will want commercial property insurance to cover your place of business and other property, other than incidents related to company vehicles.

Professional Error

If your employee or contractor makes an error (regardless of the reason) that negatively impacts a client or customer, you can be sued for professional negligence. General liability insurance does not cover those situations.

In Summary

At its core, general liability insurance protects your business concerning general accidents or complaints. For instance, if you are a building contractor, general liability protects your company from client property damage, such as accidental damage from tools used on their property.
If you want to know more about what general liability insurance covers — or doesn’t — the insurance experts at Fusco Orsini & Associates can help you find the right coverage to protect your assets, people, and reputation. We offer comprehensive insurance plans for businesses of all kinds and sizes, as well as independent contractors and consultants. Fusco Orsini & Associates has general liability and professional business insurance to suit your company’s needs. Contact us to find out how we can help you protect what you’ve worked so hard to build.

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