Why do I need General Liability insurance?

This is a question that I’m sure is on the mind of most businesses that have let their insurance lapse for one reasons or another. It’s understandable; no one enjoys paying for insurance, not even insurance agents. But it really is a necessity for nearly all businesses.

So, just what does a Commercial General Liability (CGL) policy cover? Well, here is one definition: “A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.”

Show your customers that you are serious

Having General Liability insurance shows your customers that you take your responsibilities seriously. True, there will always be fly-by-night outfits that quote the cheapest prices. What if an accident happens? Their price probably won’t seem so low if there is no insurance to pay for damages or injuries. We’ve personally seen claims on $1,000 policies that run upwards of $250,000. If you are unfortunate enough to have one of these accidents, that $1,000 policy won’t seem so expensive, will it?

Make your landlord happy

Most landlords require General Liability insurance to protect themselves in the event someone or something is harmed by you. If yours hasn’t been watching it’s really only a matter of time before they do.

Foundation of any business’ insurance program

A standard CGL covers everything except what is excluded. There are various exclusions, such as automobile (’cause it’s normally on a separate policy) and pollution (for hazardous materials such as asbestos since most businesses wouldn’t want to pay for the coverage anyway). What’s good about the CGL policy is that it covers all bodily injury or property damage claims unless it’s specifically excluded and that’s why it is the foundation for most businesses. If some of the risks excluded apply to your business you can add those particular coverages.

Helps prove that a subcontractor isn’t just an employee on a 1099

For those of you in the construction trades, the issue of Employee versus Sub-Contractor has been raging for a very long time. Many times an employer will want to declare an employee to be a subcontractor in order to reduce their Workers Compensation or payroll tax costs. However, government agencies such as the IRS, EDD, CSLB and WCIRB are well aware of the temptation. Unfortunately, each has their rules and guidelines. Maintaining their own CGL policy is one strong factor that shows that your subcontractors really are subcontractors. We also recommend that you insist on them adding you as an Additional Insured on their policy for your protection. Then, it would be their policy to provide defense in the event of an accident involving them.

As I mentioned earlier, nobody enjoys paying for insurance. If you never have any claims, it’s just a worthless piece of paper. On the other hand, if there is an accident that piece of paper will be golden.