One of the most cost-effective ways to insure a Limited Liability Company (LLC), is through obtaining General Liability Insurance. It is also known as Business Liability Insurance and protects the business and its owner from general claims involving damage to property or bodily harm. It can assist in covering medical costs and attorney fees that the business may be legally responsible for.

General Liability Insurance is not required by law, however, most businesses will require General Liability Insurance coverage as the cost of a lawsuit can run into the thousands of dollars and could possibly mean the end of the business. LLCs looking for LLC insurance cover can obtain General Liability Insurance as an effective way to protect the business against any unwanted costs from lawsuits, accidents or property damage.

What does General Liability Insurance cover?

General Liability Insurance will cover the LLC in the event of property damage by the employees or in the event of injury to a person on the business property. If the business is found liable, the legal fees, medical costs and loss of income will be covered by the insurance up to the policy limits. It is not a one size fits all cover and the business will have to assess the specific risks to the business when deciding what insurance coverage is required.

General Liability Insurance typically covers the following risks:

  • Third-party personal injury (Physical bodily harm or injury to a person, non-employee that is hurt on the businesses property or by the businesses products.)
  • Damage to property (Damage or injury to property owned by the business or owned by other businesses)
  • Legal defense costs (Attorney and judgment fees)
  • Medical costs (Resulting from a person injured whilst on the businesses property)
  • Personal liabilities (This includes slander, copyright infringements, wrongful arrest as well as invasion of privacy or property)
  • Advertising liabilities injury (Any losses incurred due to advertising by the business or any copyright infringements)

It is important to note that businesses such as accounting practices or legal firms might have to invest in personal liability insurance. This will cover the business in the case of a malpractice, misrepresentation, or negligence suit.

Depending on the state, the business might also require workers’ compensation insurance. This is different from General Liability Insurance and could be needed if the business elects to hire employees.

What does General Liability Insurance not cover?

Not all scenarios are covered by General Liability Insurance although it is considered quite comprehensive. Some businesses might require additional coverage for the type of services they offer.

The following instances are not covered by General Liability Insurance:

  • Professional errors (errors and omissions insurance)
  • Damage to employees property (employees are personally liable)
  • Auto accidents (covered by commercial auto insurance)
  • Payment to employees who have been terminated (unemployment insurance)
  • Intentional acts
  • Employees injured on the job (this is covered by workers compensation insurance)
  • Discrimination lawsuits by employees (employment practice liability insurance covers suits filed by employees due to discrimination, wrongful termination or harassment)
  • Business warranties
  • Damage to property due to fire or a storm (commercial property insurance)
  • Damaged due to professional services or advice given (professional liability insurance)
  • Coverage that exceeds the standard insurance limits (umbrella liability insurance)

General Liability Insurance includes most aspects of business operations, however, to ensure the LLC is covered correctly, the specific business risks must be assessed. The cost of General Liability Insurance will depend on the specific requirements of the business. In most cases, you will not be covered if the damage caused by the business is as a result of carelessness.

Where can I find General Liability Insurance

With so many choices out there, it can be overwhelming trying to find the right company to insure with. Every insurance company is different so make sure to read the policy details carefully. It is important to know exactly what is covered. Here are a few companies to look into.

GEICO stands for “Government Employees Insurance Company”. In the early days the company provided insurance for military personnel, but these days they serve a wide range of customers. The company is a subsidiary of Berkshire Hathaway that is headed by Warren Buffet and has offices all over the country.

With over 30 types of liability and vehicle insurance cover as well as 45 years of experience, the company can assist in customizing insurance quotes. Progressive Commercial specializes in commercial insurance and is the number #1 commercial auto insurer in America per their website.

Nationwide is one of the largest insurance and financial investment companies in the world. They offer a wide variety of insurance policies to suit different business needs. They have been around for over 90 years and are listed as a Fortune 100 company.

Specializes in commercial insurance and covers a large array of industries from Barbershops to manufacturers. They have offices all over the country and claim to be the leader in online property and casualty insurance.

The company has been around since 1820 and originally started as a fire insurance company. Nowadays they have a lot more to offer. The Hartford has also been named as one of the world’s most ethical companies 12 times.

Hiscox focuses on small business insurance and has been around for 100 years. Claiming to be America’s leader in small business insurance, the company has over 300 000 small business customers.

The company boasts an impressive 4.7 customer rating and has over 100 000 business customers. They also insure over 1000 different industries. The three founders were three small business owners themselves so the company knows the needs of small businesses.

In summary, most businesses will require General Liability Insurance. In some cases, the business might require additional insurance coverage depending on the business’s operations and risks. It is advisable to discuss the business requirements with a professional who will be able to advise on the insurance cover required for the specific business. Always make that the insurance company is registered.