Skip to main content
Liability Insurance

What does general liability insurance cover for small business?

If you own a small business, then you must think of availing a general liability insurance policy to cut down risks for your company. The policy helps your business to remain stable under a safety net. It has multiple benefits, especially in the long run.

It is a protective cover

The main objective of the general liability insurance policy is to shield your business against financial loss. The loss can originate from facing a lawsuit that accuses your company or employees of any kind of property damage, personal injury or advertising harm. 

The policy has three broad sections

It is good to know the structure of the policy to understand its effectiveness. The insurance policy has three broad sections. Each section has unique features and specific applicability. You need to go through the terms and conditions mentioned under each section of the policy document.

Coverage A: Liability concerning physical injury/property damage

This is the first section that comes under the insurance policy. The main focus of the coverage is protecting the business/company against lawsuit accusing the entity of causing a physical injury or property damage. The insurance handles the expenses of legal liability on behalf of the company. 

The acts for which the company is accused are considered as negligent acts of non-professional nature. As far as physical injury is concerned, even mental injuries can be accounted for bodily injuries, after an initial assessment of the case. 

An example where coverage A is applicable

Suppose a client’s factory unit gets damaged while operating a heavy machine. He can think the manufacturer of the machine to be guilty and file a lawsuit. In such cases, the coverage ‘A’ section of the insurance policy has a major role to play. It takes care of the costs pertaining to the legal liability. 

Coverage B: Personal/Advertising injury

It is the second coverage section of insurance policy in the present context. There are certain conditions under which the coverage is applicable. The policy document clearly mentions the cases in which the insurance has relevance for the company.

  • Libel: If there is a case of libel, the concerned person might become dissatisfied with the company. Resultantly, the individual can file a lawsuit against the company to receive compensation. The insurance policy covers the liability of the legal expenses on behalf of the company.
  • Slander: A slander falls under the category of personal/advertising injury according to the section of Coverage B of the policy. The company or its management may face a lawsuit that accuses it of a slander. The general liability insurance policy plays a crucial role to counter the situation by handling the legal costs. 
  • False arrest: The case of a false arrest also does fall under the segment of Coverage B of the general liability insurance policy. It is indeed a sensitive case of personal/advertising injury within the regulatory framework of the insurance. It definitely has applicability in a case of false arrest. 
  • Copyright infringement: Infringing the copyright of any other entity or individual can be the major cause of facing a lawsuit. A small business may have to take heavy blows in terms of legal expenses if it does not have the insurance cover. But, if it has a general liability insurance policy, there is nothing to worry about.
  • Malicious prosecution: There can be a situation when a company blacklists a vendor in the form of prosecuting it due to some malpractices. The vendor may think it wrong, considering the act as a malicious prosecution, filing a lawsuit against the company. 
  • Using someone else’s advertising idea: It is one of the classic cases that falls under the segment of Coverage B of the general liability insurance policy. The accusation can be of theft or plagiarism. The policy has a vital role to play here, covering the legal costs of handling the lawsuit on behalf of the company.
  • Wrongful eviction: You should know that the case of wrongful eviction also does fall under the section of Coverage B of the insurance policy. Wrongful entry also falls under the category. Moreover, invasion of privacy is considered in this regard, too. 

An example where Coverage B is applicable

Suppose an individual finds out that a company has used a logo design originally conceptualized and copyrighted by him. He can file a lawsuit against the company accusing the small business of copyright infringement. In such a case, the insurance policy is fully applicable. 

The insurer firstly assesses the different aspects of the case. After a thorough study of the details, it covers the costs of hiring a lawyer, fighting the lawsuit on behalf of the small business. The expenses involved in the legal liability are taken care by the insurance policy.

Coverage C: Accounting for Medial Payments

The third segment or section of the general liability insurance policy is the Coverage C. The major objective of this coverage is to take care of the medical payments, on behalf of the concerned small business. Keep in mind that even absence of any legal action can trigger the medical payments. 

An example where Coverage C is applicable

A typical example where Coverage C is applicable is when an individual gets hurt within the premises of the small business and require medical attention. The insurance policy, in this case, covers the medical costs, including ambulance expenses, hospitalization costs and similar bills. 

Go through the policy document before buying

It is advised to sincerely go through the policy document of the general liability insurance before you make a final decision to buy or recommend it. Do not hesitate to ask the insurer or broker relevant questions about the applicability of the policy, especially under various coverage sections. 

Purchase general liability insurance from a renowned broker

PlanCover has goodwill in the Indian market as a top-rated insurance broker. You can consider buying the policy from it. The company has the required certifications from IRDAI. It makes managing risk easier for small businesses. You can get in touch with the company and avail more details about the insurance cover. 

Leave a Reply