Your Business Safety Net: General Liability Insurance Tips

Your Business Safety Net: General Liability Insurance Tips

When you run a business, sooner or later, you’ll make a mistake that a customer, business partner or employee considers so serious that they decide to sue you over it. The lawsuit could arise out of an instance of neglect, negligence, incompetence or perceived unfairness. Losing a lawsuit and being slapped with heavy penalties does cripple many small businesses. Businesses are often crippled even when they win lawsuits, though; the cost of mounting a legal defense can be very high.

General liability insurance isn’t a single kind of insurance policy. Instead, it’s a catch-all term for the different kinds of insurance that businesses need to protect themselves from different kinds of legal challenge.

Your Business Safety Net: General Liability Insurance Tips

The kinds of Insurance that your Business may need to Protect itself

Product Liability Insurance:

Product liability insurance can help you in the event that you are sued over the quality or performance of products that your business manufactures or assembles.

Professional Liability Insurance:

This type of insurance helps businesses offering professional services – healthcare, legal advice, architectural services, consultancy services, and so on – from the consequences of lawsuits over deficiencies found in the quality of their service.

Insurance companies have specific products for specific professions. Healthcare businesses should consider getting medical malpractice insurance. Providers of technical services often buy errors and omissions insurance. It’s a good idea to consult professional insurance advisors such as those found at before you pick a specific insurance product.

Worker compensation insurance: In Canada, every business with employees is required by law to carry insurance to protect employees from work-related injuries.

The Mistakes you need to avoid hen Buying general Liability Insurance

If you are in construction, stay away from claims-made insurance: Construction claims-made policies offer cheap liability insurance to construction contractors. They are a cheaper version of the regular, full coverage liability policies that construction contractors usually buy.

Construction contractors have specific expectations of their liability insurance. Their clients can sue them for shortcomings in the quality of their service for years after they complete a project. This is why regular liability insurance policies for construction contractors offer 10 years of coverage for every project constructed during the time that the policy is held. If a construction contractor constructs a building while he has insurance with a particular company, but then moves on to another insurance company the following year, the first insurance company will still cover the building built by the contractor during the time that he carried their insurance. Construction claims-made insurance policies, though, only offer coverage for as long as a contractor stays with them.

Don’t buy policies whose exclusions you are not aware of: Every policy has exclusions – even policies that have terms like comprehensive or full coverage attached. It’s very important to read through your policy and understand what the exclusions are. Staying with the construction contractor example, some policies exclude liability for faulty building foundations. They can also deny coverage if you use subcontractors, sometimes. These exclusions make these policies useless to most construction contractors.

Bio: Alice is a business man of many years. An avid blogger, you can find her insightful articles mainly on business, finance and insurance websites.