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What You Need to Know About General Liability
Commercial general liability insurance protects business organizations from financial loss. It provides coverage for you, your employees, and your business for common liability claims, including:
- Property damage and bodily injury due to negligence.
- Personal injury (including libel or slander).
- Advertising injury (including damage from false advertising, slander, and limited copyright infringement).
- Other claims that arise from your business operations.
What is Covered by a General Liability Insurance Policy?
This type of policy covers the cost of property damage or bodily injury that occurs on your business property or as a result of your products, services, or advertising. If you are sued or if damages are filed against your business, general liability coverage pays up to the limits of your policy for the following:
- Cost of defending or settling claims.
- Out-of-court settlement costs.
- Damages, if you are found liable.
- Judgments awarded by courts.
- Cost of investigation by insurance company and attorney expenses.
- Cost of bonds, if they must be posted due to the claim.
A general liability insurance policy in Michigan will also pay for medical expenses for injuries sustained by nonemployees. Medical expenses for smaller medical claims can be paid without legal action which results in prompt settlement since no litigation is involved.
General Liability Exclusions
General liability insurance applies to nonprofessional negligent acts. It does not provide coverage for the following:
- Automobile accidents – this is covered by a separate auto policy.
- Employee injuries that occur on the job – this is covered by workers compensation.
- Professional liability – professional mistakes that occur due to you offering your opinion, solution, service, or recommendations as part of your business. This should be covered by an errors and omissions policy (also known as professional liability insurance or malpractice insurance).
- Damages or injuries resulting from intentional acts.
- Your workmanship – this should be covered by your company’s warranty for your work.
Other policies you may need to consider depending on your line of business include directors and officers liability, cyber liability, pollution liability, and liquor liability.
Types of General Liability Policies
A general liability insurance policy can be purchased on its own or as part of a business owner’s policy (BOP) or a commercial package policy (CPP). Depending on the risks you face, you may need to supplement the general liability policy with additional protection through a commercial excess policy (umbrella).
There are two major forms of general liability coverage:
- Occurrence – provides coverage for claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made.
- Claims made – provides coverage for claims made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place. (In some cases a retroactive date will be included in a claims-made policy.)
Liability suits are a common occurrence, and a lawsuit can have a negative impact on your business. Even if you think you won’t face a claim, a general liability policy is a wise investment for protecting against the unexpected.
Contact your First Independent Agency insurance advisor in Michigan to ensure you have the right coverage in place to protect your business.