General liability insurance is considered essential for most Rhode Island businesses. However, much confusion surrounds what it does and does not cover. Let’s look at the basics of a general liability insurance policy and why it is important for your business.
What General Liability Insurance Does Cover
Most policies cover third-party bodily injury and property damage and reputational harm (advertising injury).
Third-Party Bodily Injury
Third-party bodily injury refers to an injury that occurs on your premises. Unfortunately, in today’s lawsuit-happy environment your company could face a very costly claim if the person decides to sue.
Luckily, third-party bodily injury is covered under your general liability insurance coverage. It would kick in to cover legal fees, court costs, judgments, settlements, and medical expenses, up to the policy limits.
Third-Party Property Damage
Third-party property damage to tangible property that results in a loss of use is also covered. In other words, if someone’s goods are damaged while on your premises or your worker damages their goods, you’re covered.
For instance, your company sends a worker to a business to repair a piece of equipment. They accidently damage another piece of equipment nearby. The business sues your company for repairs and lost revenue since they were unable able to operate. Your general liability insurance coverage would apply.
Reputational harm includes issues such as slander and libel, which can lead to very expensive lawsuits. This happens more often than you might think.
Companies have been sued for what their representatives have said during an interview, on social media, and in their promotional material. Luckily, general liability insurance coverage will protect you up to the policy limits.
What General Liability Insurance Does Not Cover
Damage to data stored on electronic devices such as computers, external hard drives, and other items is usually excluded from general liability insurance policies.
Errors & Omissions
If your company provides advice to clients and a client sues you because they suffered a financial loss due to your information, you can’t rely on general liability insurance coverage. Instead, you’ll need professional liability insurance.
Damage to Your Business Property
This is covered under your business policy’s property insurance coverage, not general liability insurance coverage.
Employee Personal Injury Claims
Personal injury claims made by your employees are not covered under your general liability insurance. Employee illness and injury is covered under Workers’ Compensation Insurance.
Commercial Auto Accidents
At-fault accidents while driving for work are covered under commercial auto insurance, not general liability insurance.
General liability insurance is important for any company, but especially when their office is open to in-person visits. It is also important for online businesses that depend heavily on marketing and advertising as they are more susceptible to lawsuits for reputational harm.
Don’t leave your business at risk. If you’re unsure whether your policy covers a potential threat, give us a call.
If you don’t have liability coverage, definitely speak to an agent. Otherwise, you risk the future of your business as just one lawsuit could seriously compromise business continuity.