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General Liability claims are filed on behalf of the insured and can be made for any one or more of five types: bodily injury; property damage; personal liability (money owed to another person); contractual obligations, etc. Understanding your company’s risks is key in avoiding costly liabilities that could lead to lawsuits.
General liability covers a broad range of events that can happen to you. It is important to know the different types of general liability claims and how to avoid them.
You must be prepared for everything as a company owner. Accidents may occur for which you are responsible, resulting in thousands of dollars in damages. You’d have to pay such claims out of pocket if you didn’t have general liability insurance. Fortunately, when such costs happen, a general liability insurance coverage may help you cover them. Even if you have insurance, you should try to minimize risk and prevent as many incidents as possible.
Claim Examples for General Liability Insurance
When you’re in business, there are many different sorts of accidents that might lead to a general liability lawsuit. Learn about the dangers and how to prevent accidents that might result in an increase in your insurance costs.
Here are five general liability suit scenarios and how to prevent them.
Slip-and-Fall Claims
Slip-and-fall claims account for around 10% of all insurance claims for small businesses, with the typical claim costing about $20,000. A slip-and-fall occurs when a customer walks about your shop and slips on a damp or otherwise slick floor, falls, and receives injuries that need medical treatment.
How to Prevent
Make sure people are aware of potential dangers to prevent slip-and-fall claims. Cones and signs indicating a damp floor may be used to lead visitors to a route that is safe and free of risks. Install nonslip floor rug pads or tape in high-traffic areas to lessen the risk of sliding. Advise employees to be mindful of any situations that might result in a slick floor and to respond swiftly to resolve any issues. Slip-and-fall cases are often covered by general liability insurance’s premises liability coverage.
2. Property Damage Claims from Third Parties
When your business activity results in the unintentional destruction of someone else’s personal property, you may be liable for third-party property damage claims. Consider a situation where a contractor is pushing a wheelbarrow across a client’s driveway and loses control, causing the wheelbarrow to hit the client’s vehicle, causing large damage.
How to Avoid
When working near client property, be mindful of your surroundings to prevent property damage claims. Make sure you have ample room to operate without jeopardizing client property.
If your customers visit your store, make sure they have their goods with them at all times. Give them access to a locker or other secure space where they may keep their items if they must leave them.
3. Personal & Advertising Injury Claims
When someone’s reputation is hurt as a result of your activities, mainly by what you say or print in advertising, personal injury and advertising claims emerge. Making a public assertion (maybe on social media) that your competition is a “crook” is a frequent example. Your opponent may file a lawsuit against you if his reputation has been harmed and he is losing business.
How to Avoid
It’s simple to avoid personal and advertising harm lawsuits if you’re careful about what you and your workers say. While it’s OK to compare factual assertions between you and your rivals, don’t call them names or make derogatory remarks about them. When in doubt, say nothing at all, and be aware of how your personnel interacts with consumers. Teach them how to speak about competition in a professional manner.
4. Claims for finished operations
Products-completed operations claim coverage comes in when there is a flaw in a finished product or any other issue with the product that causes property damage or injury. This, however, will not shield a company against product recalls.
How to Avoid
Set a high degree of quality for all goods to prevent product-completed operations claims. Make sure that items are thoroughly tested for safety hazards, and that you always take client input carefully. Someone may point something out to you without filing a claim, and this might provide essential insight into a threat you were unaware of.
5. Claims for Liquor Liability
If you don’t make, sell, or distribute alcohol, your general liability insurance will cover liquor-related claims as an incidental benefit. An afternoon happy hour you throw for your staff as a means to celebrate meeting sales objectives might result in a claim. You might be held accountable if one of your workers drinks too much and then injures someone while driving home.
How to Avoid
If you wish to avoid liquor liability issues, you should make sure that alcohol is not permitted at corporate events or on company premises. If you do decide to hold a drink-themed gathering, keep an eye on who could be drinking too much. Offer to schedule ride-sharing so that no one gets behind the wheel while inebriated. Limit the quantity of alcohol that everyone is permitted to consume during the event.
What your general liability insurer pays for
When your general liability insurance coverage settles a claim, it covers the other party’s loss as well as any legal or investigative fees you may incur as a result of the claim. If a person files a slip-and-fall claim for $30,000 in medical costs and lost income, for example, your policy will pay that amount—unless you suspect fraud, in which case the insurance provider may undertake an inquiry to avoid paying a false claim.
Legal and investigative expenses may be included in the total amount paid by the insurance provider, depending on your coverage. If you only have $100,000 in liability coverage, this may rapidly deplete your insurance payout limitations. Examine how your insurer applies the claim amount to your per-occurrence and aggregate totals to determine whether you have sufficient liability coverage.
3 Things Your General Liability Insurance Doesn’t Protect You From
Third-party claims are covered under general liability. The following are examples of occurrences that general liability insurance does not cover:
- Professional liability claims: Damages resulting from a professional error in your work or workmanship are covered by errors and omissions (E&O) insurance, not general liability.
- Workers’ compensation claims: Employees are protected by workers’ compensation insurance when they are injured at work, as required by state law.
- Business auto claims: Rather than general liability insurance, your commercial auto insurance coverage protects your obligations if you are in an accident while working.
Conclusion
The greatest method to save money on general liability insurance is to avoid accidents and claims. You can’t always avoid terrible things from occurring, which is why you need comprehensive general liability insurance coverage to safeguard your company’s assets and image.
Frequently Asked Questions
What are the five types of general liability exposures?
The five types of general liability exposures are bodily injury, property damage, business interruption, advertising injury, and coverage.
Are there different types of general liability insurance?
General liability insurance is a type of insurance that protects people and companies from being financially harmed by injuries, property damage, or other forms of bodily injury.
