Risks that General Liability Insurance Does and Does Not Cover

In today’s world, there is almost nothing called “small accident.” Many people become so self-centered that even the smallest accident that they are involved in very likely encourages them to try to get fair compensation through a lawsuit. Parties who are legally responsible for that accident, directly or indirectly, have to protect themselves with liability insurance to make sure that they are not discredited and financially injured by the made claims.

general liability insuranceGeneral liability insurance is one kind of such insurance that protects business owners against claims that will likely injure their business financially. If you are running a business that sells products and serves many customers, safeguarding your business with this insurance is an important safety measure that you should perform. You can find the best insurance offers by comparing quotes for general liability insurance that are available online. Before you do that, however, you need to know first what this insurance covers and what it doesn’t cover.

What Does General Liability Insurance Cover?

General liability insurance, in general, protects your business against claims resulted from the following three risks.

Personal injury – If you, your business or your employees are accused of having injured a person, this insurance will provide coverage to all expenses that you have to make outside the court and during litigation.

Property damage – This includes not only physical damage, but also infringement, piracy, patent violation, and the like.

False or slander advertising – Advertising is so risky that even a slight mistake in it may cause other parties to sue the advertisers. Those other parties may include consumers who regard themselves as being tricked or other business owners who believe that the advertisement damages the image of their business or its products.

What Doesn’t General Liability Insurance Cover?

From its name, general liability insurance seems to provide general coverage to your business, creating an impression that it will likely cover everything. However, its coverage actually has limit and there are some risks that it doesn’t cover. Those risks are mentioned as follows.

Damages caused by disaster – If fire, flood, hurricane, or other disasters damage your business assets, this insurance less likely provides financial compensation for the loss you suffer. This kind of coverage is usually provided by other types of insurance.

Punitive damage – In a lawsuit, if you lose the case, you may be forced to pay either compensatory damage or punitive damage. Compensatory damage is the amount of money that you pay to cover the loss suffered by the plaintiff. To this kind of damage, your general liability insurance will provide coverage. Punitive damage, on the other hand, is an amount of money that you have to pay as punishment to prevent you from committing the same felony again in the future. This kind of damage, unfortunately, is not covered by general liability insurance.

Payment beyond the insurance limit – General liability insurance has limit. If the amount of money that you have to pay exceeds that limit, you have to pay the difference out of your pocket. Therefore, when comparing quotes, pay special attention to the insurance limit.