This is a question we get asked quite often. Commercial general liability is standard liability protection for all businesses. As a business owner, you may not know how much commercial general liability protection your business requires. We discuss a few factors to help you find the right limit of coverage for your company.
The Type of Industry and Your Business Operations
The major factor of how much commecial general liability coverage you need depends on your industry and business operations. For example, if you’re a consultant or account who only meets clients at their places of work or via video or phone call, you probably won’t need as much commercial general liability insurance as a retail store owner or manufacturing plant.
The more risk and the more exposure associated with your particular business and operations, the more liability coverage you’re going to need.
The Likelihood of Lawsuits
Some businesses are unfortunately more prone to being involved in litigation than others. You’ll also need to evaluate the type of lawsuit – commercial general liability insurance only covers expenses relating to someone getting hurt or having their property damaged due to negligent actions of yourself or one of your employees. It isn’t designed for anything else, so your business may require a different type of liability insurance to ensure you’re protected.
When it comes to commercial general liability, however, you’ll look at the likelihood of someone getting hurt on your company’s premises or having their property damage. If you never have clients on your premises nor do you handle their property, your chance of this type of lawsuit is low.
For example, someone who sells clothing online will have less risk exposure than a contractor who works on people’s homes or even a clothing operation with a retail store.
How much can you cover out of pocket?
Does your business have any ability to cover the costs of a lawsuit? If not, you should consider getting more insurance.
You may have contractual obligations from a landlord or other party requiring you to have a certain amount of commercial liability insurance. You should also check with any governing or regulatory bodies to see if there are guidelines.
Additional Liability Coverage
There are additional liability insurance products that cover other risks associated with litigation, including:
- Professional liability or errors and omissions insurance
- Worker’s compensation
- Cyber liability
- Product liability
Speak with your broker to determine what type of liability insurance your company requires and how much coverage you should have. There are usually different levels of protection available and you may be eligivle for commercial umbrella insurance which can cover extra costs.