In today’s litigious society, even small mishaps can result in large lawsuits. That’s why general liability insurance, along with property and worker’s compensation insurance, is essential for most companies. Liability insurance protects the assets of a business when it is sued for something it did (or didn’t do) to cause an injury or property damage.
General liability insurance
can be purchased separately or as part of a business-owner’s policy (BOP). A BOP bundles property and liability insurance into one policy; however, the liability coverage limits are generally pretty low. Businesses that need more coverage usually purchase liability insurance as a separate policy. The amount of coverage a business needs depends on a couple of factors:
- Perceived risk. Business owners should first consider the amount of risk associated with their business. For example, a business that manufactures heavy machinery is at a greater risk of being sued than a company that manufactures linens, and would therefore need more liability insurance.
- The state in which you operate. Businesses that operate in states with a history of awarding high damage amounts to plaintiffs typically need to carry liability insurance with higher coverage limits. An insurance broker can offer guidance in this area.
How General Liability Works
Under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren’t covered under general liability insurance policies because they’re considered to be punishment for intentional acts. General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence. For example, if a company has a $1 million occurrence cap in its liability policy and it’s successfully sued for $1.5 million, the insurer would pay $1 million and the business would be responsible for paying $500,000. To cover these types of situations, many companies purchase umbrella liability insurance, which picks up where their general liability coverage ends. Umbrella liability covers payments that exceed their other policy’s limits, and provides additional coverage for liabilities not covered in a standard liability insurance policy. Most insurance companies require their policyholders to report as soon as possible any accidents that could lead to a liability claim. The insurer may then require the business owner to document the situation, forward all summonses and legal notices, and cooperate fully in any investigations. Taking precautions before an accident can help keep your liability and insurance rates down. All businesses can take certain steps to lower the chance of a liability insurance claim:
- Set a high standard for product quality control;
- Make sure all company records are complete and up-to-date;
- Be sure employees are properly trained;
- Get safety tips for your type of business from your us.
We offer the following coverages:
- Primary General Liability insurance for commercial and residential subcontractors, commercial general contractors, and residential homebuilders. This includes a wide range of contractors which may include, but not limited to: Highway/Street & Road, Water/Sewer/Pipeline/Common/Power, Plumbing/Heating & AC, Painting & Paperhanging, Electrical, Masonry/Stone work, Plastering/drywall/acoustical ceiling, Terrazzo/tile/marble/mosaic, Carpentry, Floor Layer NOC, Water well drilling, Excavation and Residential Homebuilders.
- Lead umbrella & excess liability insurance for commercial and residential subcontractors, general contractors and residential homebuilders. Up to $25 million in lead umbrella limits & excess layers may be available (capacity may be limited depending on the type of risk and attachment. “Buffer” layer liability insurance may also be available.
- Primary GL, lead umbrella and excess liability coverage for a wide range of wrap-up programs (Owner Controlled Insurance Programs orContractor Controlled Insurance Programs), both project-specific and rolling coverage. Up to $25 million in limits may be available, excess of $25M attachments. Other mid-range excess liability layers may also be available, such as $15 million excess of $10 million, on practice and project-specific deals.
- Owner’s Interest Policy which provides the primary GL for the vicarious liability of the owner of land where a construction project is being performed. Up to $25 million in excess limits may be available above an Owner’s Interest Policy.
When buying liability insurance, you can purchase either an “occurrence policy” or a “claims-made policy.” An occurrence policy can cover claims made months or even years after the incident has occurred. The insurance company is obligated to review, and if warranted, pay for any claims made resulting from an incident that took place during the coverage period, even if the claim is reported at a later date.
The more commonly used “claims-made policy” provides protection only while the policy is in force and claims are made during that time frame. Prior-act coverage may also be included, indicating that acts occurring within a specific time period (prior-act coverage period) will also be covered. Claims-made premiums are generally lower than occurrence policies.
Many umbrella or “business” liability insurance packages offered will cover your basic insurance needs. However, it’s strongly advised that you read the fine print carefully, to make sure there are no gaps where you specifically need coverage.
Following is a checklist of key issues for a business to review in analyzing the terms and conditions of a liability insurance policy:
- Is the dollar amount of the coverage sufficient?
- Is the insurer financially strong?
- Are the premium payments competitive?
- Is the deductible too large?
- Does the policy cover bodily injury to customers and guests on the company’s premises?
- Does the policy cover property damage caused by employees and third parties?
- Does the policy cover personal injuries?
- Does the policy cover advertising injury?
- Does the policy cover problems stemming from the company’s products, or is a special policy needed?
- Does the insurer have a solid history of paying claims on time?
- When does a claim have to be made?
- Are the exclusions from coverage too broad?
- Are there special endorsements that may be appropriate
CONTRACTORS General Liability
As of October 1, 2001 all contractors are legally required to disclose to homeowners, in writing, whether or not they carry General Liability Insurance. If the contractor does carry General Liability Coverage he is then required to provide the name and phone number of his insurance company to the homeowner.
Any time you, the contractor, do a job for someone there is a chance that you could be sued, whether you are legally liable or not. A General Liability Policy typically obligates the insurance company to defend the insured against all allegations that, if true, would be covered by the policy. The policy also obligates the insurance company to pay damages, up to the policy limit, for which the insured is legally liable.
Premises Liability Exposure
The premises liability exposure is present whenever there is ownership or use of property. The responsibility imposed on the owner, landlord, tenant, or occupant is that the property must be maintained in a way that would be expected of a reasonable person. For example, a reasonable person would not leave frayed or unwrapped electrical cords lying around where someone could potentially come into contact with them and electrocute themselves.
Operations Liability Exposure
The operations liability exposure is usually associated with processors, manufacturers, and contractors, and relates to activity in addition to the occupancy of property. For example, if a contractor is working on a public building and a member of the public is injured because of negligent construction activity, the contractor will be held legally liable for the injury.
Products Liability Exposure
The products liability exposure deals with the possibility that a product manufactured, sold, or distributed by an organization might injure a member of the public. For example, if a contractor is injured because of a defective utility knife the company that manufactured and sold that utility knife could be held legally liable.
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