What Does General Liability Insurance Cover?
Third-Party Claims
General liability insurance primarily covers claims made by third parties who are not employed by the insured business. These can include customers, clients, supplierts, or anyone who may interact with the business and suffer injury or damage.
Bodily Injury
If someone is injured on the insured premises or due to the business’s operations, general liability insurance can cover the medial expenses, legal defense costs, and potential settlements or judgments resulting from the injury.
Property Damage
This coverage addresses damage to someone else’s property caused by the business’s activities. It can include damage to physical property like buildings, vehicles, or equipment.
Personal Injury
General liability insurance also covers claims related to non-physical injuries, such as defamation, slander, libel, or invasion of privacy. These claims arise from reputational harm or distress.
It’s important to know that general liability insurance does not cover every type of risk a business may face. For instance, it does not protect against professional errors or omissions, employee injuries, or damage to the business’s own property.
The coverage limit and premiums of a general liability insurance policy depend on multiple factors, such as type of business, its size, the industry it operates in, and its perceived risk factors. Business owners should carefully assess their specific needs and consult with insurance professionals to determine the appropriate level of coverage for their operations.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, is a type of insurance coverage that is designed to protect professionals and businesses from claims related to their professional services or advice.
It is particularly important for individuals and companies that provide services, expertise, or advice to clients, as it helps to mitigate the financial risks associated with allegations of negligence, errors, omissions, or other professional mistakes.
What Does Professional Liability Insurance Cover?
Professional Negligence
This coverage addresses claims that arise from alleged errors or mistakes made by the professional during the course of providing services to clients. It could involve issues such as providing incorrect advice, making a mistake in a contract, or failing to meet industry standards.
Failure to Deliver Promised Services
If a professional fails to deliver services or complete a project as promised in the contract, professional liability insurance may cover claims arising from the breach of contract.
Legal Defense Costs
Similar to general liability insurance, professional liability insurance covers the costs of legal defense, including attorney fees, court costs, and settlements or judgments, even if the claims are groundless.
Claims Not Covered by General Liability Insurance
General liability insurance typically excludes coverage for professional errors or omissions, which is why professional liability insurance is necessary to fill this specific coverage gap.
Who Needs Professional Liability Coverage?
Professionals who should strongly consider obtaining professional liability coverage include:
- Doctors
- Lawyers
- Accountants
- Consultants
- Architects
- Engineers
- Real Estate Agents
- Technology Service Providers
- Other professionals who offer expert advice or services to their clients.
Other Types of Commercial Liability Coverage
Workers’ Compensation
Workers’ compensation is a form of insurance that provides financial and medical benefits to employees who sustain work-related injuries or illnesses. It is a vital system aimed at protecting both workers and employers, as it offers injured employees the necessary medical treatment, rehabilitation, and wage replacement during their recovery, while also shielding employers from potential lawsuits resulting from workplace accidents.
Workers’ compensation laws vary by jurisdiction, but the underlying principle is to ensure that workers receive adequate support and compensation for workplace injuries, regardless of fault, while establishing a no-fault system that helps maintain a safe work environment and fosters a balanced employer-employee relationship.
Management Liability
Management liability insurance, also known as directors and officers (D&O) insurance, is a specialized form of coverage designed to protect executives, directors, officers, and the company itself from legal claims and financial losses arising from managerial decisions and actions. It encompasses several key components, including coverage for claims of breach of fiduciary duty, mismanagement, negligence, and employment-related practices.
Management liability insurance is crucial in safeguarding corporate leadership from personal liability, as it provides funds for legal defense costs, settlements, or judgments in the event of lawsuits, investigations, or regulatory actions. This insurance is essential for attracting and retaining talented individuals to leadership positions, fostering a more secure business environment, and bolstering stakeholders’ confidence in the organization’s management capabilities.
Employment Practices
Employment practices liability insurance (EPLI) is a type of insurance coverage that protects businesses and employers from financial losses and legal expenses arising from claims related to employment practices. It specifically addresses allegations of workplace discrimination, harassment, wrongful termination, retaliation, and other violations of employees’ rights.
EPLI is designed to cover the costs of defending against lawsuits and any potential settlements or judgments, helping businesses mitigate the risks associated with employment-related claims. This insurance is essential for promoting a safe and fair work environment, safeguarding a company’s reputation, and providing peace of mind to employers while ensuring that employees’ rights are protected within the organization.
Business Insurance Requirements in Colorado
If you are a business operating in Colorado, regardless of industry, you are legally required to provide workers compensation for your employees. Professional liability insurance is required for some professions, so be sure to consult with your Boxelder insurance professional about required coverage in your industry.
Want to keep your business protected? Schedule a free consultation with a Boxelder insurance expert to see how we can find the right policies for your company.
Business Insurance FAQ
How much does business insurance in Colorado cost?
The amount you’ll pay for business insurance depends on various factors, including the type of coverage you need, risk exposure, location of business, industry, claims history, and more.
What is a Business Owner’s Policy (BOP)?
A business owner’s policy (BOP) is a popular choice for business owners, as it bundles general liability, commercial property, and business income coverage into a single policy. Many BOP’s also offer the ability to add extra coverages like professional liability, commercial auto, data breach, and workers compensation. This is a convenient and easy solution for small business owners.
What is the difference between a Claims-Made vs an Occurrence Policy?
A Claims-Made Policy helps cover claims filed during your policy period. It includes a retroactive date that allows for coverage regarding incidents that occurred before the technical policy start date.
Claims-Made Policy Example: If your coverage started January 2023 and has a November 2021 retroactive date, and a client sues you in February 2023 for an event that occurred in December 2021, your insurer will help cover that claim.
Claims-Made Policies will also have an extended reporting period, which allows you to make claims made during a specified time after your policy expiration date.
An Occurrence Insurance Policy provides coverage for incidents that happen during your policy period, regardless of when your claim is filed. Even if the policy has expired, any incident that occurred during the policy period will be covered.
Want to keep your business protected? Schedule a free consultation with a Boxelder insurance expert to see how we can find the right policies for your company.