Running a business is always risky. It is so because it involves extensive labour and working in high-risk conditions. Business owners often buy a business insurance policy to protect themselves from risks. General liability insurance is a type of commercial liability insurance. It protects you from the third-party liabilities. It also provides coverage for reputation harm, and copyright infringement.
What does general liability business insurance cover?
A general liability insurance policy covers the physical injuries inflicted to a third-person inside your company premises. It also comes to your rescue when a third-party claims for the property damages. In short, it protects you from the third-party liabilities due to which your company can get sued.
Suppose that you have used a copyrighted image of a photographer. He can sue your business for using the image without his consent. General liability insurance also covers the property damage claims filed by a landlord for your rented property. General liability insurance coverage includes the legal costs required to defend your business. It proves to be of great help when a client files a lawsuit against you for dishonesty or defamation.
Why general liability insurance is required?
The claims filed by the clients and other third-parties for physical injuries or property damages can cost you in millions. You may not have enough resources to cover the legal expenses. The losses are more severe if you have to compensate the clients due to the court’s verdict. A comprehensive general liability insurance policy provides coverage to these expenses. It saves you from paying the losses from your pocket.
Suppose that you run a construction business. Property of your client may get damaged while carrying out some construction work. Or else, a family member of your client may get injured due to negligence of one of your workers. In both the cases, your client can sue you and claim compensation for the damages. The general liability insurance will protect you from these claims.
A general liability insurance policy is cheaper than a commercial property insurance plan. It is because it does not cover your own property damages. It also does not cover the physical injuries sustained by your workers or employees at work. It is perfect liability insurance for small and medium-sized businesses. The business that cannot afford to avail many insurances or a comprehensive business insurance policy to cover their business risks can also get it.
A general liability insurance plan also protects your business from the defamatory lawsuits. For instance, the cases of slander and libel filed by a third-party are covered under this policy. The losses caused due to such incidents can hamper the regular operations of your company. Get the best general liability insurance to protect your company from these losses. It will enable you to carry out the regular business operations without any worries!
Key Features of General Liability Insurance
- Extensive coverage: A general liability insurance policy provides an extensive coverage to your business from third-party claims. It covers the legal expenses incurred to defend advertisement injuries, defamatory cases, and other claims that affect the reputation of your business. The bodily injuries and property damages claimed by a third-party are also covered by this policy. Further, any damages caused due to your products, services, or business operations are also covered under general liability insurance.
- Copyright infringement cover: If someone claims that your business used their intellectual property or work for your own marketing or advertisements, it can be included in general liability insurance coverage.
- Advertising injury cover: If other parties find your advertisements to be defamatory or insulting, they can file a lawsuit against you. The legal expenses borne to defend such cases along with the compensation (if ordered by the court) will be covered under this policy.
- Privacy intrusion: If you use a photograph of a celebrity or known figure intentionally or unintentionally in your advertisements, they can file a lawsuit against your business. A general liability insurance plan will protect your business from the liabilities filed due to such instances.
- Coverage for reputational harm: You may say something derogatory about other businesses while giving an interview or speaking from a public platform. The reputational harm can affect their business and they can file a legal claim against your company. A general liability insurance policy will come to your rescue and protect you from the financial losses suffered due to such claims.
Characteristics of General Liability Insurance
- Limit of liability: Limit of liability is the maximum amount covered by the insurer when you raise a claim. A bigger business needs wider coverage. As a result, the sum insured i.e. limit of liability also increases.
- Product recalls: Product recall liability covers the expenses incurred after recalling defective products. It is generally offered as an add-on cover with general liability insurance. Yet, some comprehensive general liability insurance policies may include this coverage by default.
- Coverage territory: Coverage territory refers to the geographical area that insurance covers. The coverage territory is to be selected as per the extent and nature of your business. Suppose that you conduct business across the country. Now, you can get general liability insurance with a countrywide coverage territory
Types of General Liability Insurance
- Directors & Officers Liability Insurance: Claims filed by suppliers, customers, shareholders, employees, suppliers, and other stakeholders can be covered by this type of general liability insurance.
- Product liability insurance: It covers the property damages or physical injuries caused by the products of a company.
- Trade credit insurance: The trade credit insurance will protect your losses caused when your clients fail to return the payment in exchange for your products or services. It usually happens due to credit risks like bankruptcy, insolvency, or protracted defaults.
- Commercial General Liability Insurance: General liability insurance does not cover losses or damages caused by products or services. However, a commercial general liability insurance policy covers the premises, products, operations, and even completed operations. Therefore, it offers a much wider coverage than general liability insurance.
General Liability Insurance Plans Available in India
|Policy Name||Sum Insured||Policy Tenure||Key Features|
|Commercial General Liability Insurance by Tata AIG||As per the business type and coverage requirements||1 year||Premises liability, operations liability, products liability, and third-property damages are covered by this policy. |
Extensive worldwide network that covers over 130 jurisdictions.
Covers personal and advertising injury and medical expenses as well.
|Commercial General Liability Insurance by HDFC ERGO||As per the business type and coverage requirements||1 year||Wide coverage including personal injuries, property damages, advertising injuries, and bodily injuries to a third-party. |
Medical expenses coverage, completed operations hazards, vendors endorsements, and other add-on covers can be availed with the policy.
Libels, intellectual property damages, privacy invasions, etc. are also covered under this policy.
|General Liability Insurance Policy Online by Digit Insurance||As per the business type and coverage requirements||1 year||Wide coverage with a quick claim settlement process is offered by this policy. |
Product recall expenses, personal injury, bodily injury, etc. are covered under this policy.
Easy application and affordable premium
|General Liability Insurance by Bimakavach||As per the business type and coverage requirements||1 year||24/7 customer support assistance is offered by the insurer. |
This policy can be tailored as per your business type and coverage requirements.
Quick application process is facilitated by a paperless documentation procedure.
|Commercial General Liability Insurance by Future Generali||As per the business type and coverage requirements||1 year||Faster policy issuance and quick claim settlement procedure is offered by the insurer.|
Legal expenses incurred while defending defamatory and such other lawsuits filed by a third-party are covered under this policy.
General liability insurance coverage is offered at an economical premium.
Inclusions & Exclusions for General Liability Insurance
- Your clients or customers might get injured or while after using your defective products. They may also suffer from property damages due to your products. The general liability insurance covers the liabilities caused due to such events.
- It covers the damages to surrounding properties during your ongoing business operations.
- Copyright infringement claims due to use of intellectual property, trademark, etc. without the owner’s permission can be covered under this policy.
- The general liability insurance coverage includes the reputation damages that a third-party suffers due to your public statements.
- General liability insurance also covers the instances when a third-party files a defamation case against your business due to an advertisement.
What’s not covered?
- General liability insurance coverage does not include the property damages or physical injuries caused on purpose by the insured
- The injuries and property damages caused under the influence of alcohol are not covered by this insurance policy.
- If a third-party suffers from any physical issues/injuries during discharge of contaminants or pollutants from the company premises, it is not covered under this policy.
- General liability insurance does not cover professional mistakes or errors. It also does not cover employee injuries and accidents.
- Punitive damages, fines, or penalties charged by the local government bodies are not included in the general liability insurance coverage.
- The general liability insurance coverage does not include cover for the own property.
- Damages caused due to wars, invasions, and nuclear perils are not covered under this insurance policy.
- Damages caused due to natural and man-made disasters are not covered by default. Yet, a business can get an add-on cover to get protection from these events.
Who needs a general liability insurance policy?
Any business that needs to indulge in frequent interaction with third-party clients, vendors, suppliers, and other stakeholders must get a general liability insurance policy.
Businesses that are responsible for marketing, promotions, and advertisements of their clients should get it to protect themselves for the advertisement injury and copyright claims. The companies that sell products to the clients or customers can also get this insurance. It will help them cover the damages and bodily injuries sustained by a third-party while using their products.
A business may suffer financial losses due to a third-party claim filed by their clients due to non-compliance of contracts. Though general liability insurance does not cover contractual liabilities by default, it can be availed as an add-on by paying extra premium. General liability insurance is usually taken by general managers, company owners, managing directors, operations heads, etc. who are directly responsible for conducting the daily business operations.
Things to consider while getting general liability insurance
- Understand business risk exposures: Understanding the risk exposures of your business before getting a general liability insurance policy is important. Suppose that you are conducting business in a rented property. In this case, get general liability insurance with cover for rental property damages. The risk exposures also vary as per the business type and size. For instance, restaurant owners with higher footfalls carry a greater risk as compared to the restaurant owners with fewer daily footfalls.
- Fix the budget: Do not go for a lower sum insured because it lowers the commercial general liability insurance cost. You can consult an insurance agent or broker to find out the best sum insured and coverage that your business can get without paying a hefty premium. Before choosing the sum insured and coverage, check things like:
- Location risks
- Multiple risk locations
- Annual turnover of your business
- Jurisdictions covered by your business
- Be prudent while selecting the deductibles: A higher deductible may lower the insurance premium but it will also increase your out of pocket expenses during claims. As a result, you must choose the deductibles providing enough coverage without increasing your policy premium.
- Coverage scope: A regular general liability insurance plan provides cover for third-party damage, reputation harm, and advertising injury. Seek a wider coverage if your business demands more coverage due to higher risk exposure. For instance, you operate the business in many locations. In this case, you may need a wider coverage to insure all the business locations.
- Check the exclusions: Check the list of exclusions before getting general liability insurance. It will highlight the areas that are not covered by your insurance. This will help you to add other covers for getting protection for those areas. For example, professional services are not included in general liability insurance coverage. Get a professional indemnity cover along with a best general liability insurance policy. Together, they will provide complete protection for your business.
How to claim general liability insurance?
Follow these steps while claiming for general liability insurance:
Step 1: Contact the insurer immediately
If a third-party files a claim for property damages or bodily injuries, contact the insurer immediately and provide them with the details of the claim.
Step 2: Provide the policy details
The insurer will ask for your policy details like policy number, name registered with the policy, etc. and create a case for claim settlement.
Step 3: Fill the claim form & submit documents
The insurer may ask you to fill the claim form with all the relevant details. You may also submit the documents that support your claim.
Step 4: Appointment of the surveyor
Once you submit the claim form and documents, the insurer will appoint a surveyor for verifying the details of the claim. The surveyor may visit your business premises for inspecting the nature of damage or bodily damages caused to a third-party. After that, he will create an inspection report that comprises the extent of damages or bodily injuries along with prediction of the expenses caused by them.
Step 5: Claim settlement
The insurer will finally process your claim request and decide the sum insured to be provided to the insured. You need to be patient and cooperate fully with the insurance company till the claim gets settled.
Documents required for verifying the claim
The following documents can be submitted to verify your claim:
- Duly filled claim form
- Legal notice or claim letter issued by your client/customer
- A copy of the insurance policy document
- FIR report (if filed by a third-party)
- A written statement explaining the nature of the loss, location, claim type, etc.
- Inspection or surveyor report
- Other documents that the insurance company asks while processing your claim
What is the difference between commercial property insurance and general liability insurance?
A commercial property insurance policy covers insured’s own property along with the third-party damages. Yet, a general liability insurance plan only covers the third-party liabilities. It also does not provide coverage for the injuries sustained by your workers or employees. But, it provides coverage for the physical and mental injuries caused to a third-party due your products or business.
Can temporary employee claims be covered under the best general liability insurance?
No, temporary and permanent employees are not covered under general liability insurance. It also means that the temporary employees may sue you for injuries sustained while executing works in your business premises. Permanent employees are already covered under the group insurance policy but the temporary employees are usually not covered by it. So, it is one of the major issues reported under commercial general liability insurance policy.
Is contractual liability covered under general liability insurance?
No, contractual liability cover is not included in a general liability insurance policy. It means that the liabilities filed by your clients for non-compliance of contracts or contractual obligations are not covered under this policy. But, you can avail it as add-on coverage by paying an extra premium.
Are product quality issues covered by a general liability insurance policy?
Yes, general liability insurance coverage includes product quality issues. It means that it covers the incidents when a client or customer files a lawsuit against you for the injuries or illnesses or property damages inflicted while using your products.
Is privacy invasion included in the general liability insurance coverage?
General liability insurance coverage includes privacy invasion. It means that the general liability insurance has got you covered if anyone files a lawsuit against your business for privacy invasion.
What are the key differences between CGL and BOP insurance policies?
CGL (Commercial General Liability) insurance protects your business from third-party liabilities. It includes personal and advertising injury cover as well. BOP (Business Owner’s Policy) includes property insurance, business income insurance, and general liability insurance. It means that the BOP insurance covers your own business property and financial losses caused due to business interruption. These types of add-on coverage are not included in CGL. Any business can subscribe to CGL but BOP is only meant for smaller businesses.
What does the medical payment coverage under general liability insurance cover?
General liability insurance offers medical payment coverage. It covers the medical expenses incurred to a non-employee in your business premises. This policy covers the physical and mental injuries along with the illnesses caused to a third-party due to your business
What is directors and officers liability? Is it included in general liability insurance coverage?
Directors and officers liability is an add-on cover that can be availed with general liability insurance. It is not included in general liability insurance coverage by default. It provides coverage for the wrongful acts, breach of duties, misstatements, omissions, and other mistakes made by directors and officers of a company. Some insurance plans also extend this coverage to the employees.
What is a pollution liability cover? Is it included in general liability insurance?
A pollution liability cover is for the first and third-party property damages or bodily injuries caused due to environmental pollutants. It also includes coverage for the clean up expenses caused due to an unforeseen pollutant. A pollution liability cover can be included as add on cover with general liability insurance. However, it is not pre-included in the general liability insurance coverage.
Which factors are evaluated while calculating general liability insurance premium?
Consider factors like location, multiple location risks, nature of business, risk exposure of the business, sum insured required to insure a business, etc. while calculating general liability insurance premium. You can opt to pay a higher deductible for reducing the insurance premium. Calculate the general liability insurance premium using a general liability insurance premium calculator available on the insurer’s official website or mobile app.
What does personal and advertising injury coverage under general liability insurance cover?
Personal and advertising injury coverage protects the insured from the liabilities caused due to libel and slander. It also includes coverage for privacy invasion, using advertisement ideas or work of another individual without consent, copyright infringement, malicious prosecution, and false arrest. This coverage is included under the general liability insurance coverage.
Which businesses usually get general liability insurance plans?
The below businesses usually get a comprehensive general liability insurance policy:
Real estate brokers
Small business owners
Is it mandatory to get a general liability insurance policy?
It is not mandatory for businesses to buy general liability insurance online or offline. Yet, not having this insurance can result in heavy financial losses due to third-party liabilities. It protects your business from the property damage and physical injury claims filed by a third-party. Personal and advertising injury, privacy invasion, and copyright infringement is also covered under this policy. So, getting it will prevent your business from these losses.
How should I get general liability insurance?
You can buy commercial general liability insurance online or through an insurance agent. While applying for general liability insurance, you need to keep these details ready:
Details of your business
Number of workers employed in your firm
Business location including information on whether you own or have rented the business property
Business documentation showing your ownership
Estimation of the gross business revenue that your business will make in the upcoming year
Should I buy a BOP or GLI?
GLI (General Liability Insurance) protects your businesses from unforeseen expenses arising from third-party claims. But, it does not include the damages caused to your own or third-party property due to natural and man-made disasters. If you are looking to get coverage for these perils, you can opt for BOP (Business Owner’s Policy). It includes a general liability cover, commercial property insurance, and business interruption cover. As a result, it is much cheaper to get a BOP instead of buying all these insurance policies.