What is General Liability Insurance?

General liability insurance is intended to safeguard any type of business from large financial losses if there is a personal injury claim or property damage lawsuit. Whether or not your company is guilty of any wrongdoing, the cost to hire lawyers and defend your business can be expensive. The cost of legal defense is one thing that liability insurance will pay for.

It doesn’t matter what type of business you have, a general liability insurance policy can cover construction, counseling, medical, as well as insurance and real estate firms. Lawsuits against businesses occur all the time and for many reasons. Just some of the lawsuits that general liability insurance can protect you from include negligence, personal injury, and malpractice.

General Liability Insurance covers a wide variety of legal issues, including if someone is injured on your property or by a company vehicle, to property damage or harm caused by one of your employees to someone outside your organization.

If someone slips and falls in your store, or an employee knocks a hole in a client’s wall, the lawsuit for damages could bankrupt a company and run it out of business. General liability insurance will shield your business from lawsuits for damage, injury, or frivolous claims.

Getting the Best Price for General Liability Insurance

To find cheap general liability insurance it is important to do a little research to determine what policy limits and coverage details you need based on the type of business you have. Then when you shop for insurance you can compare the pricing from several companies for equivalent policies.

For instance, higher policy limits might be necessary for a medical professional than for someone in yard care. A contractor will need different coverage options than a dog groomer. So the first order of business in finding cheap general liability insurance is to establish exactly what you need, then get quotes.

General liability insurance typically covers almost any type of damage caused by you or your employees. While the coverage may be the same, the cost for the same insurance can vary quite a bit. One of the best places to find cheap general liability insurance is online. There are several services that allow business owners to multiple quotes by inputting the information once. These quotes will come from companies such as Nationwide, The Hartford, Allstate, as well as insurance agents based locally.

One such online general liability quote provider is NetQuote, The quotes are provided at no cost and without obligation.

Some of these online services will help you determine what type of coverage you should have and then quote the cheapest options. Typically a general liability insurance quote will include:

• Bodily or physical injury to an individual
• Damage to property
• Product liability
• Contractual liability as the business extends to an assortment of contracts for clients

General liability insurance can be extended to freelancers working for your organization, doctors who consult, and company directors or other officers of the company.

Next Steps for Getting Cheap General Liability Insurance

In order to get the best price and product for general liability insurance there are some general steps that you can take to insure you make the right choice for your business. These steps include:

• Check the Department of Insurance website for your state and get information on the top insurance carriers for general liability policies dealing with your industry. You can find the website by searching: State name Department of Insurance.
• Check out several online insurance brokers with an eye to those who provide quotes from the companies on the list generated from above. Check the about tab for the brokers and read about their general experience, the experience in your industry, and their education. Search the internet for reviews on the online broker.
• Reduce your list to five to seven insurance providers that you want quotes from. Use one or more online brokers to get a prices quote on the same policy limits and coverage for the insurance companies on your list. Using the internet will cut down on time and effort and give you a basis for comparing costs.
• Talk to vendors, customers, and other business owners and ask where they get their general liability insurance coverage. Make a few calls to local agents and get quotes on your short list of acceptable companies.

With the pricing stage of your research complete, pick out the top three prospects and verify that the coverage is the same for each price quote. Then research these companies for service levels, complaints, and reviews. This typically can be accomplished within a few minutes on the internet.

Now you are ready to choose the best provider for cheap general liability insurance.

What is Liability Insurance?

Liability insurance coverage protects the individual or organization from the legal liability of loss or damage. Business liability insurance offers various types of coverage for your company protecting you against the liability for damages done to someone outside of the company. This policy does not cover something done within the business by its employees, this is for what is termed a third-party, or someone outside the business (like a client or customer) that is hurt at your place of business or by an employee of the company, or damage is done to their home or other property. If awarded, the money is not paid to you, but to the third-party.

The damage might stem from someone falling in your store, a vehicle accident caused by a delivery truck, or if a contractor causes plumbing damage that floods a client’s home. There are various types of damage and injuries that business liability insurance will cover the cost of, while saving your company from financial distress. Just as there are several types of liability insurance that may cover products, professional services, automotive liability for business vehicles, and even to protect a business from its employees.

Certificate of Liability Insurance

The certificates of insurance typically consists of one or just a few pages, instead of the insured having to provide the entire, somewhat lengthy, insurance policy. This liability insurance certificate summarizes the terms and conditions of the insurance coverage.

Where the entire liability policy might hold proprietary information on the business, including rates, business volumes, and other information that the insured may not want made public, the insurance certificate provides only the basic information that proves the policy is in place

The certificate of liability insurance supplies information that includes:

• The insured’s name or the party or parties that are insured
• The agent or broker that issued the certificate
• Policy numbers
• Effective date of the policy and its expiration date
• The specific type of policy, including the insurance limits or exclusions, and what the policy is intended for

The certificate of liability insurance would also contain any key details, all disclaimers and events that would lead to cancellation of the policy on both the part of the insurer and the insured, as well as how and when the insured would be notified if the insurance coverage were to be cancelled.

Use of Liability Insurance Certificates

Business use of the certificate often follows a transaction where one party agrees to indemnify or cover the other person or entity. The certificate is used to show proof that there is coverage in place to financially uphold this agreement. Contractors and business owners often have to carry liability insurance to protect themselves or their company from any lawsuit due to loss or damages.

If contracted to do the work, the person hiring the contractor or business may want to see that you are covered for any negligence before they award the job. The certificate of liability insurance would then be used as proof that you carry such insurance.

Insurance Certificates – History

There is a standard form available through ACORD, which stands for Association for Cooperative Operations Research and Development. This site provides information on insurance standards and changes in regulations.

There are other organizations, such as ISO or the Insurance Services Office, Inc that have introduced their own version of the insurance certificate. There are also non-standard forms available; these forms are sometimes referred to as manuscript forms instead of certificates.

Certificate of Liability Insurance Disclaimer

It is important to remember that this certificate is not the insurance policy, but merely a snapshot of what the policy entails. The certificate actually has a disclaimer that while it contains information about the policy as it was when the certificate was generated, it does not confer any rights to the holder of that certificate. There are also no indications on the certificate if there have been any modifications of coverage.

Summary

A Certificate of Liability Insurance serves as a simple rundown and proof that the insured has liability insurance that would protect others against negligence that causes loss or damage to property. This is not the actual insurance policy, but a breakdown of what the policy covers and its limitations.

It is important for the insured, as well as those who require proof of insurance to understand the what the Certificate of Liability Insurance covers, the limits of the policy, and when the insurance would cover any loss or damages caused by the insured.

What is an Insurance Broker?

An insurance broker is typically an agent that works with many different insurance agencies to find their clients the best possible policy and premiums that are available. Brokers take the research and hassle out of finding a policy that meets their needs. The broker has already completed the research on the insurance companies and knows which ones will meet the business needs. The broker is also able to negotiate a better price for the business than it could obtain on their own. This is simply due to the broker bringing lots of business to the agency than they might get on their own.

An insurance broker also typically acts as the go between for the insurance company and the business owner. This means that the business owner doesn’t have to deal with the intricacies of policy applications, forms and other things that are necessary when keeping a policy up to date. The broker typically has a more direct contact at the insurance company and doesn’t have to go through the customer support line. This can be an important aspect that helps a business decide to let a broker handle their insurance needs rather than try to find an insurance company on their own.

Questions to Ask the Broker

The following questions are some of the most important questions that any business owner should ask their broker when shopping around for an insurance policy through an insurance broker about the insurance companies that they present for review:

• What is the insurance company’s Moody or AM Best rating? This is a rating that is based on the stability of the insurance company. A high rating is the sign of a strong, stable company. If the company has a low rating, the company should possibly be avoided or at the least researched further. If the broker has confidence in a company with a low rating, it could be worth asking why. It could be that the company is relatively new and is still working on getting a higher rating. Don’t jump to conclusions without having all the facts about the company.
• What types of businesses does the broker typically deal with? Some insurance brokers specialize in a particular type of business. This might make them unsuitable for the business that you run. The main reason for this is the types of claims that the business may have to file. This is also important in choosing the right types of plans that are presented for review. If the broker typically deals with banks and financial services then they might not be well-suited for finding plans that a contractor needs. This is an important factor to consider so that the policies presented equal what the business needs.
• Will the broker always be the one that handles the company’s business? This is also important. Many insurance brokerage firms have several agents that may share the workload. This results in you dealing with a different person every time, not an ideal situation. If at all possible, try to find a broker who will be your once source of contact. This keeps the confusion down and also keeps everyone on the same page.
• Clientele: Ask the insurance broker for a list of clients. There should be no hesitation on the part of the broker. Additionally, make sure to call some or even all of the clients and ask about their experience with the broker. The reputation of the broker, particularly from clients, is a good indicator of their business skills.
• Will the broker be available to personalize polices if necessary? Ask the broker how they handle personalization of insurance policies. This is actually one of the main tasks that a broker is in business to do. They work with insurance companies to get your policies to read how you want them to read.

If you can get the answers to these questions from your insurance broker and you are satisfied with the answers that you get, you will have the ideal insurance broker and should be able to get the policy you need for your business.

The cost of business liability insurance will depend on several factors. The first is the worth of the business, the type of business, and whether you need general liability insurance or a more specific type of commercial liability coverage.

General liability insurance for a business is intended to guard the company against large financial losses in case of a personal injury claim or property damage lawsuit. Even if you are found to be innocent of any wrong doing or liability, defending the company against the claim can be expensive and liability insurance will pay for legal defense.

What is Business Liability Insurance?

Business liability insurance covers your company for damages done to someone outside of the company. This is not for the business or its employees, this is for what is termed a third-party, or someone outside the business (like a client or customer) that is hurt at your place of business or by an employee of the company, or damage is done to their home or other property. If awarded, the money is not paid to you, but to this third-party.

The damage might stem from someone slipping on the sidewalk, a business vehicle accident, or an employee knocking a hole in the wall of a client’s home. There are various types of damage and injuries that business liability insurance will cover the cost of, while saving your company from financial distress.

Are There Different Types of Liability Insurance?

There are several specialized forms of business liability insurance including:

• General Liability Insurance – is a type of broad coverage that protects small business owners from lawsuits initiated by someone injured on your property or resulting from the actions of your employees.
• Automotive Liability Insurance – covers company vehicles and any injuries or property damaged caused through the operation these cars, trucks, or other vehicles.
• Product Liability Insurance – protects the business from lawsuits initiated because of products and items that your business manufactures.
• Professional Liability Insurance which may also be called Errors and Omissions Insurance – covers you in case of a lawsuit arising from services you provide. This might include counseling of any type, day care, pet grooming, tax services, or any type of service granted.
• Employers’ Liability Insurance – covers the business when a lawsuit is filed because one of your employee’s may have caused another employee to become sick or injured. General Business Liability Insurance will cover third-parties from injury or sickness, but it another employee becomes injured or sick due to another employee’s actions, then Employers’ Liability Insurance will protect the business from a lawsuit filed by an employee. This type of liability insurance is different from workers compensation insurance. Employers’ Liability Insurance is required by some states.

Business Liability Insurance Costs

Business insurance rates, including business liability insurance costs, are determined by the state’s Department of Insurance. Insurance companies will have different rates, based on their overheads and additions, but the rate for each specific insurance company will be the same whether you get the quote online, from a broker, or directly from an agent.

The cost of business liability insurance can be affected by many items including:

• Liability Insurance Limits – which refers to the maximum amount the insurance company will pay out on a claim. This limit varies and you should make sure you have the right amount of coverage based on your businesses specific risks. This is important because if you purchase a policy with a million dollar limit and lose a lawsuit awarding the third-party more than a million dollars, the business will have to make up the difference. Work with your insurance agent or broker to determine the best liability limit for your company.
• Deductible – most general liability insurance policies don’t have a deductible. This is the amount that the business would have to pay before insurance covered the rest of the lawsuit. However, a small business owner that would not have a high risk factor might be able to keep their liability insurance costs down by agreeing to a deductible.
• Exclusions – business liability insurance costs might differ based on exclusions. This means that there would be some things that are not covered under the policy and these things might differ from quote to quote. It is important that you understand what exclusions, if any are in your quoted policies. Examples of exclusions might be intentional injury, breach of contract, acts of war, etc.

Business Liability Insurance Quotes

Business owners can get an online estimate of costs from NetQuote, a service that provides business liability insurance quotes. This service will provide as many as five quotes from national insurance carriers within a few minutes of filling out a small questionnaire. The quotes are provided at no cost and without obligation. These online business liability insurance costs are quoted by companies such as Nationwide, The Hartford, Allstate, as well as insurance agents based locally.

It’s simply a matter of money. Often, a settlement can be reached that is much less than what the plaintiff has claimed in the suit, and the end of the suit means the end of expensive legal fees that the insurer is required to pick up.

Insureds may not always want to follow their insurer’s inclination to settle, however. In many professional businesses, a settlement can be read as an admission of wrongdoing or incompetence by the defendant, and could adversely impact the defendant’s reputation and business brand. A company that loses face by making a settlement could see an adverse impact on its relationship with customers or suppliers and other businesses vital to its success.

Insurers recognize the possible reluctance of insureds to settle these type of cases, but also are very much aware of the potential of a drawn out case with a big judgment to severely impact its bottom line. To compel their insureds cooperation with reasonable settlement offers, many insurers include a “hammer clause” within their commercial general liability and other liability policies.

Hammer clauses act to compel insureds to comply with an insurer’s decision to settle a case rather than fight it out in court. In general, there are two types of hammer clauses, “full” hammer clauses and “modified” hammer clauses.

A full hammer clause basically informs the insured that if the insured goes against the insurer’s recommendation to settle, the insured will be responsible for any judgment won by the plaintiff plus legal fees that go beyond the settlement offer and legal fees up until the settlement offer. Some full hammer clauses even go as far as to hold that if an insured bucks a settlement recommendation from the insurer and loses the case, the insured will be on the hook for the entire settlement and legal fees cost.

A modified hammer punishes recalcitrant insureds less severely than the full hammer. In a modified hammer clause, the insurer will agree to pay a certain percentage over the settlement amount if the insured decides to disregard the insurer’s settlement recommendation. The percentage varies from policy to policy, but is usually either 50 or 70 percent.

Obviously, because a policy with a modified hammer clause presents more risk to the insured than one with a full hammer clause, premiums for modified hammer policies are likely to be more expensive.

How it works

For example, let’s suppose that you’re a design company and you’re hit with a $1 million negligence suit. The claim is bogus, but you get an offer to settle for $300,000. You want to fight it in court because you know the claim is no good, but your insurer wants you to settle the case.

If your policy does not have a hammer clause, you have a right not to settle and your insurer must respect that right. However, if your policy has a hammer clause, your insurer has the right to cap your benefits at the settlement amount plus your legal fees up to the time the settlement is made, let’s say $50,000 for the sake of argument. If you buck your insurer and proceed to court and lose, you’ll be on the hook for the judgment amount against you minus the settlement amount and the legal fees you had generated up to the settlement offer. Let’s say the judgment is for $750,000 and you generated an additional $10,000 in legal fees. Under the policy’s hammer clause, you would be liable to pay $410,000.

Who’s got ‘em?

Not all insurers include hammer policies, but many do. Here’s a list compiled by industry experts of major insurers who do and do not include hammer clauses in their policies:

Hammer clause:

• Houston Casualty Company/RAMCO
• Lexington Insurance Company
• New Hampshire Insurance Company
• Beazley Insurance Company
• XL/DP
• Everest National/Insight
• ACE American Insurance Company
• Zurich North America

No hammer clause:

• CNA/Schinner
• St. Paul Travelers

When faced with a lawsuit, it’s important for insureds to know whether their policy includes a hammer clause and what it entails before accepting or rejecting an insurer’s offer to settle.

Many professionals think that all they need to do is find an insurance company that offers professional liability insurance and sign up for a policy. What they are overlooking are the many details that only a professional agent is able to offer.

Why Use a Professional Agent

The main reason for using a professional liability agent is to ensure that you have ample coverage without having more coverage than you need. While it isn’t necessarily bad to have more coverage than necessary, it is not necessary to pay for more insurance than is needed. There are some questions that can be asked of the professional agent to help determine how much insurance is needed and other basics that are necessary before signing on the dotted line for a policy. Some of those questions are:

• What does the liability insurance policy cover? Find out exactly what is covered and what is not covered. Many people incorrectly believe that liability insurance covers any lawsuit that is brought against them. Make sure that the limitations and exclusions are spelled out so that there are no questions. For instance, does the insurance cover work done under the umbrella of a firm only or will it cover professional work regardless of whether or not the work is through a firm or as a private consultant.Typically, liability insurance covers bodily injury and property damage; advertising and personal injury liability which includes libel, slander, and copyright infringement; premises and operations liability coverage; and medical expenses. It is vital that the coverage for these are understood and if they are not included a determination made as to what should be included and how much coverage is needed for each one.

• How much liability insurance is needed? This question will vary from one business to another. The typical face value of a liability policy is usually $1,000,000.00; however, there may be conditions that make additional coverage necessary for the business to fiscally secure. There are many considerations that the agent will look at when determining how much liability insurance is needed. The size of the business, the number of employees, the location of the business, and even the state that the business is in because of state laws. Every business will have a different set of risks and different needs in the amount of coverage, this is one of the main reasons that a professional agent should be consulted.The bottom line when it comes to the amount of liability insurance needed is going to be the business owner or professional’s decision but it should be made on the advice of the insurance agent. The agent will be able to point how much personal risk is being assumed if the amounts are not high enough to cover being brought to court in a liability case.

• How to reduce liability risks? A professional liability agent will have many ideas and ways that the business can reduce the risk of having a liability claim. Some agents have brochures with information while others may point the business in the direction of the Internet for ways to reduce liability claims. The main idea is that the business owner learns ways to reduce the chances that they are involved in a liability suit.

The owner should find out if the agent offers educational seminars for employees on how to reduce the risk of a lawsuit.  It might even be possible to get discounted rates for training employees on risk and keeping liability costs low.

Professional liability insurance is a major component of any business and so it is simply good business to consult with a professional liability insurance agent when purchasing a policy. These agents can help choose the amount of insurance needed and explain what is and what is not covered.

Professional liability insurance agents are trained and educated to know what is required in the state they work in as well as having an understanding of the general overall insurance concept so that they can assist their clients in obtaining the best policy for their needs without spending more money than is necessary on a policy.

Public policy dictates that some personal and business activities that run a risk of being harmful to others through the potential negligence of a person or company should be insured to reduce the likelihood of long term uncompensated harm to members of the public. There’s a wide variety of personal and business liability insurance available, such as D & O liability, general liability, professional liability insurance, employer liability and automobile insurance liability.

In general, liability insurance falls into three categories, public liability, product liability and employer liability.

Public liability

Public liability insurance, in general, provides coverage for claims from the general public that may arise from certain risk-laden activities undertaken by individuals or businesses.

Perhaps one of the most well-known types of liability insurance is automobile liability coverage. This form of liability insurance provides coverage for claims filed by people whose property may be damaged by the actions of the insured. While the insured driver won’t be compensated for any damage to his or her vehicle, the owner of another vehicle or of a building or other property damaged by an accident that’s determined to be the fault of the insured driver will be compensated.

Businesses usually purchase general liability policies to cover claims that may be filed as a result of injuries that may occur in the course of their business. For example, most restaurants and bars are required to purchase general liability policies that offer coverage for claims that may arise because of fires, or fights, etc.

E&O policies also fall under the umbrella of public liability. These policies indemnify insureds from claims that the negligence of employees or officers of a company caused injury or harm to a plaintiff.

The purchase of insurance to cover public liability isn’t just good for the public, it’s also good for businesses, because the costs of defending liability lawsuits and paying potential claims out of pocket is enough to shut down most small businesses and even some larger businesses.

Product liability

Product liability insurance generally isn’t required by law, but most manufacturers who make products bought and used by a broad section of the general public would be wise to purchase such a policy. Product liability insurance indemnifies manufacturers from claims of injury by consumers who bought products from the insured and claim that they were injured as a result of the manufacturers negligence in making or selling the product.

Although it’s not compulsory in many states, most large-scale manufacturers choose to carry the insurance because of the business-killing potential of a big product liability suit.

Employer liability

Employer liability coverage protects employers from claims that company negligence or wrongdoing caused injury to their employees. Most states require companies to at least carry workers compensation policies that will provide coverage for employees who are hurt on the job. More substantive policies may be carried by employers to cover other liability claims.

Legal issues

When a liability claim is made, the insurer has the right to defend that claim in court, attempting to prove that the alleged loss being made by the third party was not caused by the third party. Policy limits tend not to apply to the cost of covering such suits, which can be quite lengthy and expensive. In some cases, if the insured is found to be liable for the claim, the insurer may try to deny coverage if the activity causing the claim lays outside the scope of coverage, or if the insured engaged in activity that might put the claim outside the scope of coverage offered by the liability policy.

The Internet age has given rise to new questions regarding liability insurance and its application to intangible but extremely valuable information and data. Legal questions about the definitions of liability with regard to system failure, protection of data and and claims of non-performance by technological companies have caused insurers to write policies with more care and potential insureds to shop a little more carefully when buying liability insurance.

When buying liability coverage, you may not need the highest amounts possible.  You do, however, need to meet state requirements.  To find out what your state’s required liability coverage amount is, visit the Department of Motor Vehicles website for your state.  Also, when considering the amount of coverage you need, find out if your loan holder requires a higher amount.  Those with car loans from banks or other lenders will be required to hold liability insurance at a higher amount so as to cover the cost of the car if it is totaled.  The liability insurance will need to be written to include this information, including who your car loan lender is.

To get the best coverage amount at the best price, take the time to get quotes from several insurance providers.  Compare what they are giving you including what amount of liability coverage you are getting and any limitations or exclusions that apply.  Often, insurance companies will wrap liability coverage into other insurance policies including collision insurance.  If you do not carry a loan on the vehicle, you may not want to have these added expenses.  Work with the insurance providers to get the most appropriate insurance policy for you.

When it comes to getting liability insurance, take the time to work on improving your driving habits.  By staying accident free and claim free over the long term, you will reduce the amount of risk you are to the insurance provider.  In turn, this allows for you to lower the amount of insurance premium you have to pay over time.  You should also look into getting new insurance coverage each year, or at least getting quotes from several insurance companies on a yearly basis, right before your insurance is set to expire.  Doing so will allow you to have the coverage you need at the most affordable price.

Liability insurance is not an option for most vehicle owners and drivers.  Those that do not have this insurance may face criminal charges for driving without it.  Yet, for many people, it is the least expensive form of insurance today.  Those with a good driving record will not have to pay an overwhelming amount, either.  Keep in mind that liability insurance is just one type of car insurance you should have to protect yourself and your vehicle from any type of accident you are involved in.  Talk to your insurance broker to find out how much liability insurance they recommend for you.

What Does It Cover?

Liability insurance provides protection in a number of ways.  Each policy is different, which is why it is very important for you to look at several policies to get the best protection possible.  In most cases, liability insurance claims for the following are covered.

• Full cost of damages: damages to another’s property, including vehicles is covered.  Any claim that is made that is caused by a direct result of your fault will be covered.
• Hospital and medical payments: Coverage of another person’s hospital and medical care is covered if those costs are because of the accident you’ve caused
• Rehabilitative care:  If the injured person or people need to receive any type of rehabilitation following the accident, the insurance company will cover the costs
• Lost income:  If the injured person or people miss work or are otherwise unable to collect their regular income, the insurance company you have liability coverage through will cover the costs.
• Pain and suffering: These costs are also covered, though there may be some limits and the amount is often defined by the court, not the other individual injured.

As you can imagine, each of these claims can be highly expensive.  Without any type of liability coverage, you may find yourself unable to make payments.  The law sees this as a problem and that is why most states require that you have some type of liability coverage to have a license and to operate a motor vehicle within the state.Without liability coverage, the costs of each of these expenses would be yours to pay directly, out of pocket.  Your health insurance will not cover the costs of someone else. More so, you may be sued by the injured party for property or other possessions if you do not pay for the costs upfront.

Limitations of Coverage

It is essential to know what your limited liability coverage provides coverage from.  Most liability policies will have a maximum amount they will pay out.  If the court and judge approves an amount that is higher than the covered amount, you may have to pay this out of pocket.   The good news is that most insurance companies have very powerful attorneys who will work to minimize any and all payments that must be made by them on your behalf.  Therefore, most insurance companies will work to have the amounts claimed lowered whenever possible.