What is General Liability Insurance – Meaning, Cost & Benefits


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Every LLC business will need a liability insurance policy so as to ensure that under no circumstances, the business owners will have to bear the costs of the damages, be it the bodily injuries, property damage, invasion of privacy, legal defense costs, and others. But what is general liability insurance? This page will tell you everything.

general liability insurances

Several types of commercial umbrella insurance plans are there, including professional liability insurance and workers’ compensation insurance. However, it is the liability business insurance that acts as the most important coverage plan for any kind of LLC, be it a foreign LLC, a domestic LLC, a single-member LLC, and so on.

What is General Liability Insurance?

While opening a limited liability company (LLC), you should be aware of the several business risks associated with the business. Amongst these, it is the liability risks that every business owner should be concerned about. This is where the general liability insurance plan comes into the role play.

A liability insurance policy will help you to cover the costs of injuries incurred on your employees or on yourself or the other members while being on the business property. Apart from this, the liability property insurance policy will also cover the legal costs that you might have to bear while fighting against a lawsuit or paying for penalties levied on you.

Risks Covered by General Liability Insurance

Professional liability insurance will cover some of the risks that will be present for your business. Here is the list of all the risk factors that come under the coverage plans of the liability policies.

  • Bodily injuries will include any kind of physical injury caused to your employee. It will also include a third-party bodily injury within your business property
  • Property damage, either to your or your client’s property under your supervision
  • Medical expenses for any treatment done for injuries gained within your business premises
  • Advertising injury caused by your advertisements to any other business or client
  • Legal defense fees

How Much General Liability Insurance Costs

The average general liability insurance cost will depend on the state where your LLC is situated. However, the general limit for liability insurance coverage ranges between $300 and $1000 per year. The exact business liability insurance cost will depend on several factors, which we have discussed below.

Variables Affecting General Liability Insurance Fee

  • If your business is exposed to greater risks than others, your liability insurance cover will cost you more.
  • Location of the business, generally based on the ZIP code
  • The number of employees you have and the annual payroll amount
  • Amount of coverage that is payable per incident related to your business
  • Total coverage amount payable per policy period
  • Deductibles

How to Get General Liability Insurance for LLC

It is not an easy task to get the liability insurance coverage plan for the businesses. Many factors must be considered when you will choose commercial insurance for protecting your liabilities and assets.

  1. Collect the required information and documents

    Your first task for buying general liability insurance is to gain more information pieces about the same. You need to ask about the requirements your business must meet to take this insurance policy. Besides, you also need to know the documents you have to submit at the time of applying for the commercial liability insurance plan.

  2. Hire a commercial agent

    For having management liability insurance, you need to look for a professional agent working in a popular private insurance company. As a responsible business owner, you need the agent’s help to understand the details of the insurance coverages that will help you in saving operating expenses.

  3. Determine the needs of your business

    For getting the certificate of insurance, all the businesses need to determine the needs. For example, if you deal with cars, you will need commercial auto insurance. For LLCs having a huge number of employees, compensation insurance is a must. If the company deals with manufacturing, insurance for contractors will be ideal. You can also look for insurance cover theft if you want to protect the tangible assets of your business.

  4. Evaluate the liability insurance options

    No matter how many common insurance policies you have looked at so far, you need to decide which particular liability and life insurance policy will be perfect for your business. Let’s say you want to cover work-related injuries, but the policy you have chosen provides benefits for bodily injury liability. In this case, the policy wouldn’t be suitable for you. This is why for choosing the type of insurance, you need to understand the options.

  5. Get the quote for the liability insurance.

    Lastly, you need to get the liability insurance quotes to understand what the limits of insurance are, how much you need to pay as a premium. The benefits you will get as employers, and so on.

Benefits of General Liability Insurance for LLC

Following are the areas which will be covered under your policy as per the general liability insurance definition.

  • Liability claim of assets
  • Employee injuries
  • Copyright infringement injuries of other businesses
  • Auto insurance policy plans
  • Coverage for damages to your property
  • Accident and slander coverage
  • Personal injury liability coverage
  • Company advertising injury

F.A.Qs

How should I know my insurance policy limit?

When you take the insurance to cover your business operations, you need to understand the limits applicable to different companies and professional services. Based on the type of business and the normal business operations, the limit will vary.

Will my general liability insurance cover the medical costs?

Yes, your insurance plan will cover the medical claims for an injury that your employees might receive. Apart from this, the policy will also cover work-related personal injury.

Are replacement costs of stolen or damaged products included in the policy?

Yes, the policies will also cover the business interruption expenses caused due to theft or damage to products your LLC business deals in.

What is General Liability Insurance for Contractors

General Liability insurance protects the small business owners from lawsuits and aids in completing contracts and leases. it also covers business risks like customer property damage, advertising injury, etc.

So, what exactly does general liability insurance for contractors entail? In a nutshell, it offers protection against third-party claims for bodily injury, property damage, and personal injury. For instance, if a visitor suffers an injury onsite or if a contractor accidentally damages a client’s property, they can be held liable for the ensuing costs. With general liability insurance, contractors are safeguarded against such claims by having their legal and medical expenses covered.

One of the significant advantages of this insurance coverage is the peace of mind it provides to both contractors and their clientele. For contractors, having general liability insurance offers reassurance that they are protected from costly legal battles and potential lawsuits. Knowing that they are covered allows them to focus on delivering quality work to their clients without the added worry of unexpected financial burdens arising from damages or injuries that may occur during the construction process.

On the other hand, clients who hire insured contractors can relax knowing that they are protected if an unfortunate accident occurs. For example, if a contractor fails to secure an electrical connection adequately, resulting in a fire that damages the property, the client can rest assured that they won’t be left footing the bill for repairs and restoration. In this sense, general liability insurance not only protects contractors but also establishes trust and credibility in the eyes of the clients.

Moreover, having general liability insurance can help contractors grow their business and secure new contracts. Many clients, especially larger corporations or government entities, make liability insurance a requirement when evaluating contractors for a job. By having this coverage in place, contractors demonstrate professionalism and a commitment to responsible business practices. This, in turn, can increase their chances of being awarded contracts and expand their business opportunities.

Another aspect worth mentioning is that the costs of general liability insurance vary, and the coverage provided can differ from one policy to another. Factors such as the nature and size of a contractor’s business, the level of risk involved, and the desired coverage limits play a role in determining the premium amounts. It is crucial for contractors to assess their specific needs and shop around for the policy that best suits their circumstances. Consulting with insurance professionals can be enormously helpful in navigating the different options available.

In a nutshell, general liability insurance for contractors is a vital aspect of protecting both contractors and clients from costly legal and financial setbacks. Its coverage scope extends across various risks that can arise during contracted work, ensuring that all parties involved have peace of mind. By having this insurance in place, contractors can safeguard their business while establishing a reputation for reliability and accountability. Similarly, clients gain confidence in the knowledge that they are protected from potential unforeseen circumstances. Ultimately, the presence of general liability insurance continuously reinforces trust, quality, and security within the contractor–client relationship.

In Conclusion

It is important to have insurance while running your business. You never know when and what kind of risks can emerge. General Liability Insurance is one such protection for your LLC that will protect your assets and business if such unpleasant threats occur. I have listed down the details of General Liability Insurance as much as possible in this article. Share your feedback with us in the comment section below.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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