General Liability Insurance Questions

Why Should I Buy General Liability Insurance?

If you own or operate a business you should buy general liability insurance to transfer the risk of doing business to the insurance company. General liability insurance reduces the chances your company will be sued by a customer or vendor for negligence. In the event you are sued, the general liability policy protects the financial stability of your company by paying for expenses related to the lawsuit.

The amount of liability insurance your company needs depends on the nature of your business. Many insurance companies offer basic general liability insurance coverage of $1,000,000. You may require more insurance depending on your company size, specialty and your client base. Some businesses are more susceptible to lawsuits than others. For example, a company that manufactures products is more at risk of being sued by a customer than a sole proprietor who does business primarily from his home. In this example, the sole proprietor will need significantly less insurance coverage than manufacturing company.

General liability insurance covers business owners. Coverage is extended to sole proprietors and partners, as well as the spouses of sole proprietors and spouses. Coverage also applies to an organization's officers, directors and stockholders to the extent of their duties within the organization. General liability insurance also provides coverage for acts committed by employees or volunteers of an organization.

General liability insurance is designed to pay expenses that result from your negligence. An exception to this is medical payments coverage. Medical payments coverage pays immediate medical expenses for injuries sustained on the insured premises. The coverage pays regardless of fault. It is designed to pay medical expenses right away without the injured party seeking damages through a lawsuit.