Liability Insurance - A Brief Explanation
If you operate a business in the modern world, there is always a risk that your business may be sued for causing some sort of harm to others. The person suing the business (the “plaintiff”) could be a customer, an unrelated party, or even an employee of the business. Liability insurance can help pay for legal defense costs, a settlement with the plaintiff, and/or damages if the business is deemed liable.
Not all businesses have the same level and types of liability risk. A graphic design company doesn’t have the same exposure to negligence lawsuits as a construction company. Similarly, a graphic design company that has clients visit the office every day will have a different liability exposure than a graphic design company that works entirely online. Each business should find a liability insurance policy that covers the types of lawsuits that might be brought against the business.
Many businesses purchase a Commercial General Liabiltiy (CGL) policy to insure against a standard range of lawsuits. The CGL is a standard policy form in the insurance industry. According to the International Risk Management Association, a CGL policy is “…issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.”
Here are a few examples of these liability risks. A common bodily injury claim is when a customer slips and falls on the business’s premises and sues for negligence. If an employee accidentally bulldozes someone’s fence during a construction project, the business may be sued for property damage. A claim of advertising injury might be based on the business’s unintentional use of another company’s marketing idea or trade slogan. A personal injury lawsuit may arise if a business’s employee publishes a false statement that damages someone’s reputation.
Most CGL policies will cover all of the liability scenarios described in the previous paragraph. However, CGL policies typically do not cover a number of other liability risks such as employee injuries, accidents involving business vehicles, professional services liability, and business liquor liability to name a few. There are special insurance policies available to address almost any liability faced by a business. Business owners should give us a call to identify their liability risk profile and find the right policies to provide adequate protection from lawsuits.