General liability insurance is an insurance policy that safeguards a business against third-party claims of property damage and bodily damage. The plan protects the policyholder against financial losses arising from lawsuits or other claims made by third parties, vendors, partners, or customers. It is a way for businesses to pay for legal defense and protect themselves against potential bankruptcy and financial losses. So, here is a brief guide to general liability insurance and its coverage:

How does it work?
Broadly, a general liability policy works by offering financial protection to the policyholder in case of a third-party claim of damage caused by a business. So, if the business is legally responsible for causing property damage or bodily injury, the insurance company will bear the costs associated with the claim to a certain extent. Typically, these insurance plans cover costs like settlements, legal fees, and medical expenses. So, the business pays the policy premium, and in return, the insurance company provides protection against financial losses in response to claims of the businesses’ employees, services, or products causing harm.

Coverage
This type of insurance is designed to cover costly claims that arise during normal business operations. If one does not have such coverage, one bears these expenses out-of-pocket. Broadly, the general liability insurance coverage includes the following:

Third-party property damage: A company’s employees, while providing services at a client’s home, can accidentally cause property damage. Here, a general liability insurance plan will cover the repair or replacement cost for damaging the client’s belongings.

Third-party bodily injury: If a customer falls in a store and gets hurt, they may sue the business. Here, the insurance company will pay for the medical bills if the organization has general liability coverage.

Advertising injury: A business can be sued for copyright infringement if it is accused of using someone else’s work without permission. For instance, the business can be sued by a photographer if they did not allow the business to use their picture. Here, the damage can be covered under general liability.

Reputational harm: Someone may sue a business for slander or libel. If that happens, general liability insurance can cover the legal costs to defend the business.

One of the most crucial things one must learn as part of this general liability insurance guide is that the policy does not cover every claim. So, most plans do not guard cover costs for claims such as:

1. Errors in providing professional services
2. Damage to business property
3. Work-related illnesses or injuries sustained by the employees

Cost
On average, the cost of general liability insurance is around $42 a month. However, most small businesses pay less than $25 towards their general liability insurance price. The cost varies depending on the industry, business size, coverage, and location. However, one can lower costs by choosing coverage limits that best cater to their business needs.

Who needs general liability insurance?
Small business owners, real estate agents, consultants, and marketing firms, among other businesses, opt for general liability insurance. Here are some cases where one may benefit from such coverage:

1. If one creates marketing materials or advertises their businesses
2. One uses social media professionally or personally
3. One hires temporary employees
4. One requires coverage for work contracts
5. The business is open to vendors, clients, or the public
6. One uses third-party locations to carry out business activities