Who needs general business insurance? Every business needs general business insurance. The mere fact that a business exists suggests that there may be risks in carrying out day to day operations. In a litigious society no business or individual can risk going without business liability insurance.
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Fortunately, there is protection from frivolous lawsuits when general business insurance or commercial general liability insurance is carried by businesses.
Size Does Not Matter
Whether a business is run by a sole proprietor or is large enough to have hundreds of employees, general business insurance is a worthwhile investment. General business insurance can prevent the wholesale loss of assets in the event of a lawsuit. When a business is not adequately insured, the result can be devastating.
An Example of Risk
An example of a major loss that can occur when a business does not have sufficient insurance coverage is a restaurant that is accused of serving tainted food that makes several people sick. The restaurant’s owner may have put various safeguards in place to prevent food poisoning, but the actions of an employee can result in mishandling food. If the restaurant is sued, and does not have the appropriate coverage, the result can be bankruptcy, loss of reputation and loss of jobs. It would be nearly impossible for such a business to recover from the financial devastation and loss of trust.
General Business Insurance Protects Assets and People
General business insurance covers issues such as advertising image, bodily injury, property damage, and personal injury, which includes libel and slander. This type of insurance protects a company even when law suits are frivolous. General business insurance helps minimize financial losses that can occur when a company is involved in a lawsuit. Companies without general business risk losing assets, and this may result in the business closing and jobs being lost. A business owner might lose personal assets and in some cases a company’s employees and directors might be sued.
Types of General Business Insurance Coverage
Personal and advertising injury covers actions such a disparagement, libel, slander and copyright infringement that might occur during advertising. A general business insurance policy covers the cost to defend a business against a lawsuit related to employment, whether the suit is brought by employees or applicants. Defense costs may be covered for some liability claims. Medical expense coverage pays medical costs for a person who is injured and required medical attention as a result of an accident on the business property.
Liability for operations and premises covers damage or injury incurred by persons on the property or as a result of operations. Tenant’s liability covers damages to persons or property, and losses sustained by those who rent property owned by a business. General liability insurance may not cover every business action that could cause injury. Professional liability insurance covers errors, omissions and negligent actions on the part of employees, or the business owner.
General Liability and Property Insurance
General business insurance should cover property that could be damaged or stolen. If a business keeps a large amount of inventory on hand that could be lost in a fire or by theft, general business insurance could cover such losses. Additionally, some businesses hold customers’ property for safekeeping or repair. Business such as storage facilities, dry-cleaners, automobile body shops, and garages could have a situation where such property is destroyed by a natural disaster, fire; or property could be stolen. In this circumstance, insurance is needed to replace property that is lost or stolen through no fault of the property owner.
Choosing a General Business Insurance Policy
Not all general business policies are created equally. When a company shops for a general business policy, it is important to choose carefully by asking a lot of questions. A company should leave no stone unturned. It is essential to look at people and property. This includes the people who work for the business, clients, and anyone who might be directly affected by the actions of the business. Additionally, the property of the business and the property that may be left at the business by clients should be considered.
Assess Insurance Needs
Prior to settling on a policy, a business owner should assess any actions whether intentional or accidental that might be taken by employees that could lead to litigation. Consider the following questions about the business when shopping for a policy.
- Does the business prepare food for sale to the public?
- Does the business sell alcoholic beverages that are consumed on site?
- Does the business provide medical services, and to what extent?
- Does the business provide caregiver services for children or older adults? This brings up the issue of liability for the actions of workers.
- Does the business or organization use products that could potentially be harmful to others? A business that uses pesticides, or dispenses medications would be in this group.
Other pertinent items to consider include the location of a business. Is it in a high crime area where a break in or robbery might be imminent? Does being in such an area put clients or patients at risk? What hours does the business keep? In some cases covering all of these aspects may mean going beyond a general business insurance policy, and adding excess liability coverage. This will cost more, however, the alternative can be devastating losses which can cost a business, money, reputation and at the worst, result in loss of the business owner’s and employees’ livelihood.
Failing to Get General Business Insurance is Risky Business!
General business insurance makes sense. No business is immune to unexpected events like natural disasters, theft, or frivolous lawsuits. General business insurance provides peace of mind, protection, and reduces the risk of catastrophic losses.