How Much General Liability Insurance Does a Small Business Need?

Small businesses face a lot of general risks during operation. General liability insurance is a common yet crucial policy designed to cover businesses from potentially expensive accidents and lawsuits. So how do you decide how much coverage your small business needs?

First, it is important to realize that the size of your business is only part of the considerations for how much insurance you need. Even small businesses need a reliable general liability insurance policy geared to cover specific dangers.

The Importance of Industry

Your business’ industry is just as important as the size of your company. Some industries have higher risks of accidents than others. Industries with physical locations, for example, typically pose higher general liability risks than a purely online store.

Previous Claims

Has your business been in operation for a few years? If so, take a look at your company’s claims history. If you have a long history of claims, you may consider raising how much general liability insurance your business needs. Higher limits can help you avoid reaching the policy’s claim limits.

What Does General Liability Insurance Cover?

General liability insurance covers three main areas:

Bodily Injuries: General liability insurance can help cover medical bills a person may face due to an injury on the business’ property. It can also cover the business’ legal expenses in case of a lawsuit regarding the injury.

Property Damage: Property damage coverage helps compensate those whose property is lost or damaged due to the business’ negligence, as well as covering related legal costs the business may face.
Personal and Advertising Injury: Personal and advertising injury covers primarily non-physical claims. This includes coverage for claims concerning libel, slander, malicious persecution, copyright infringement, theft of another’s advertising idea and more.

Additional coverage can be purchased for businesses that need it, as well as policies that can fill in gaps in a general liability insurance policy.

For most businesses, insurance agents recommend a business owners policy. This type of insurance policy combines general liability insurance and commercial property insurance into a flexible policy specifically geared for small businesses. It allows small business owners to adjust limits, add coverages and tailor deductibles to their business’ needs.

Make sure to speak with an insurance agent about insuring your business with the right insurance. Having too little coverage can leave your business open to expensive lawsuits and other accidents that could present a hard road of recovery.

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