5 Reasons Why Every Business Needs General Liability Insurance

January 9, 2023

|By CJ

Small businesses make up 99.99% of all firms in America with a total of more than 31.7 million companies. But regardless of a company’s size, every business needs insurance.

General liability insurance is the most popular insurance type you can buy, and it’s necessary for every business.

But why do you need it? What protection does it offer?

Keep reading to learn about the top five reasons every business needs general liability insurance.

1. General Liability Protects Against Injuries

A general liability insurance policy offers the protection a business needs against injuries and accidents that occur in the workplace.

Note that this insurance type doesn’t provide coverage for the company’s employees or owners. Instead, it protects any guests who visit the company. These individuals may include:

Mail delivery people
Delivery drivers
Customers
Vendors
Utility workers

Your business might also have other types of people that come to your business. For the most part, these individuals will be safe when they visit your company, but if an accident occurs, you need to make sure you’re protected.

Suppose, for example, a delivery driver falls down your stairs when carrying packages into your company. Falling down the steps might lead to broken bones and other injuries. The delivery person can then demand you to pay for these damages which can cost you thousands and thousands of dollars if you don’t have appropriate protections in place.

2. General Liability Assists With Lawsuits

Additionally, a business might face lawsuits after injuries occur at the company’s physical location. Paying for a person’s injuries is costly, but paying for a lawsuit is worse. Fortunately, general liability insurance covers lawsuits, so your insurance plan will cover relevant expenses if a person sues you after sustaining injuries.

This coverage can include finances to fund both a lawyer to represent your company and legal fees. These expenses can cost hundreds of thousands–if not millions–of dollars in some cases, and if you have to pay these expenses out of pocket, you could lose your business. That’s why general liability coverage is so vital.

3. General Liability Insurance Covers Your Mistakes

General liability insurance offers a wide range of relevant protections including covering damages from your mistakes. While you and your employees might take the appropriate steps to avoid errors, mistakes can still happen. Unfortunately, these mistakes can be costly, but with the right insurance policy, you may not have to pay anything out of pocket.

For example, consider the risks certain foods may have if you work in the restaurant, bakery, cafe, or other food service-related industry. One risk you may commonly face is contamination. This can come from mishandling of produce and ingredients by processing plants, certain cross-contaminations with allergens like shellfish and peanuts, or other factors.

In many cases, entire businesses have to be shut down during a sanitation process so that the contamination can be removed. These businesses can’t make any money while they’re closed, and they may suffer damages to their reputation if word spread about the contamination. This can severely limit a business’ long-term success and can cost it a significant amount of money.

Fortunately, general liability insurance will likely cover every expense related to the original mistake or contamination to help keep the company in business.

4. You Can Customize General Liability Coverage

Insurance policies protect businesses against risks. Yet, every business faces different risks. As a result, insurance companies encourage businesses to customize their liability policies. A liability policy protects against the things described in this article, and it also provides other protections.

An example of this is cyber liability insurance. If your business faces risk associated with cyber threats with online transactions, logs, or other digital content, you need adequate cyber protection.

Cyber threats and problems come in various types. For example, hackers might break into your computer system and steal information. Another example are ransomware attacks where hackers hold your information hostage until you pay the ransom they demand.

You can talk to an insurance agent to learn about other forms of liability coverage to add, like a cyber liability policy. Then, you’ll have a custom plan that protects your company’s unique risks.

5. General Liability is Usually Required

Finally, every business should purchase liability insurance to meet the legal requirements. The federal government has rules relating to the insurance types that businesses need. For example, they require that employers have workers’ compensation and disability insurance. However, they also require liability insurance for some businesses.

You might also check with your local city and county to determine the insurance requirements. Meeting these requirements is essential, as you may face consequences if you fail to purchase the proper insurance types.

Protect Your Company With the Right Insurance Types

Your business needs protection, and general liability insurance provides a good foundation of coverage.

If you’re interested in a general liability insurance policy and want to learn more, contact our top-tier team of insurance agents today. We’d love to help you find the plan that works best for you.