General Liability Basics
We live in a society where an accident can result in a lawsuit against the person responsible for the accident. Severe injuries can be sustained and even death can occur. General liability insurance is protection that a business acquires to protect them against being sued. It doesn't matter if a business was or was not responsible for bodily injury or for property damage, the unexpected can happen and it is good to be protected.
General liability insurance may be purchased by itself or it can be purchased as part of a bundle that includes different types of insurance that is important to the business owner. The liability coverage with these bundles, however, may not be enough. This low amount of coverage results in the business owner purchasing their policy separately in order to have enough protection.
Determining Coverage Amount
When determining the amount of coverage needed from a general liability insurance policy, as a business owner you should evaluate the degree of risk that you are facing. How likely is it that bodily injury or property damage, or the need for employment practices insurance may occur within your business or outside of it? Do you have heavy machinery within your facility that could result in severe bodily injury? If you do, your chances of being sued are greater than a business that doesn't operate heavy machinery.
You also need to look at the state in which you are doing business. Some states have a history of awarding large amounts of money to individuals who have been injured or the families of those who have been killed. Look at these cases where high amounts have been awarded and base your decision upon that.
Basics of General Liability
If your business is involved in an accident and is deemed at fault, the insurer that holds your policy is responsible for paying legal costs. They are actually legally obligated to pay the covered liability claims that include personal injury, property damage, bodily injury, and any damage sustained from false advertising. General and compensatory damages are covered but punitive damages are not since punitive damages assume that any injury or damage caused by the accused was intentional.
For those businesses that feel they need more coverage than what the insurer is offering, there are umbrella policies that provide additional protection on top of the general liability that already exists.
As for what you do when an incident occurs, you simply report it to the insurer as soon as it happens. Any accident has the potential to lead to a liability claim. From this point, it is the responsibility of the business to document anything relating to the case and to forward any and all correspondence to the insurer.
It can be helpful to take precautionary measures to ensure an incident does not happen, but an accident is an event that occurs without intention. Unfortunately, everyone encounters both large and small accidents throughout their lives and there is nothing that can be done. All that can be done is adequate protection put in place if the unintentional act of hurting someone or their property leads to a lawsuit that could hurt the accused financially.
By having general liability in place, the business is protected from having to use its revenue to satisfy damages sustained in an incident. Businesses that have not had adequate insurance have been damaged severely. Some have been damaged to the point that they almost go out of business and some have gone out of business. Then there are those that have had lawsuits filed against them and they have been just fine because they have general liability that takes care of the damages for them.