Pat Brown updates Deb on the revised Michigan No-Fault Insurance law on the Morning Blend.
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Pat Brown talks about C.Y.A. (cover your assets) and how to do that through Umbrella Protection.
Also known as business liability insurance, general liability insurance is the foundation of every business’ insurance coverage.
This coverage typically encompasses elements from personal injury and bodily injury, to property and asset damage. Because of its versatility, general liability insurance is essential for businesses large and small.
What is General Liability Insurance?
General liability insurance is recommended for just about anyone operating a business and covers the costs of risks associated with operating that business. For example, if a customer is injured on your property; your general liability policy could kick in to handle any suits or expenses associated with the injury.
General liability insurance is designed to protect your assets in the event that something goes wrong (like a customer getting injured on your property) and it’s important to remember that unless you have it, you don’t have any sort of protection.
Which means you’re writing checks to make it right.
Because it covers so much, it’s recommended that your coverage is greater than the combination of your earnings and assets.
Risk should only ever touch your policy, not your business.
What does general liability insurance cover?
General liability is something of a catch-all term, but there are clear definitions of what it covers, including the following:
- Bodily injury: When a business is found responsible for causing physical harm and injury through accidents like slips, trips, falls, etc. they are held responsible for the costs, too. Bodily injury coverage under general liability covers those costs.
- Personal injury: Often conflated with bodily injury, this covers the impact that the words and language a business uses can have on individuals or other organizations. For instance, if the words of one business damage the reputation or otherwise cause harm to an individual or organization that isn’t physical in nature, this insurance will cover that. It also covers the costs of psychological issues that a business could be held responsible for.
- Property damage: Covers any damage to property and physical assets. For example, a case where a tradesperson (or subcontractor) damages the furniture or the walls of a home while they are working.
Can these distinct coverages be separated out into individual policies?
Some may be inclined to separate the coverages based on what they perceive the risk of each possibility to be. In the state of Michigan, general liability insurance is standardized, meaning you get the same general coverage across the board. However, some aspects are pick and play, with customers having some control over coverage limits in different areas.
To make sure you understand what’s covered and what isn’t, you should have the standard coverages laid out for you. This can be done with an Accord form, a form that outlines what coverage is in place and allows you to be a certificate holder.
Subcontractors working under a contractor should have this form sent to them if they’re covered under the primary contractor’s policy.
The Certificate of Insurance or Form 25, shows your occurrence limits on medical expenses, medical expenses, completed operations coverage and your general aggregate coverage.
Choosing the right coverage for your General Liability Policy
Even with standardized insurance, the best way to make sure that you get the best deal is to let the agents do the work.
Instead of listing out what coverage you believe you need, let the agent ask the right questions to ensure you’re properly covered. When you make choices without knowing the ins and outs of the industry, you put yourself at risk.
Make calls to different agents, see what questions different providers ask. This should help you see which agents are truly committed to providing the level of coverage you need versus those who are trying to come up with a number quickly to close a deal. From there, it’s about comparing what you want vs. the different offers made. In general, the amount of coverage you want is based on industry standards, though $1M is ta standard base.
Why would my customer ask for my Certificate of Insurance?
At some point, a customer or client will most likely ask if you carry insurance because they’ll want to make sure they’re not going to be left on the hook for any costs that come as a risk of doing business with you. If there’s significant exposure to risk, a customer may not want to do business with those who don’t carry general liability insurance–so, make sure you’re covered.
General liability insurance is a necessity for anyone operating a business. That said, it’s not usually the “end-all,be-all” policy. Instead, it’s designed to work in tandem with other policies, such as auto coverage, workers comp, and other policies that protect against more specific risks.
