Understand general liability insurance for your small to medium-size business
Tim Gaspar is the owner of Gaspar Insurance Services.
Hello. My name is Tim Gaspar with Gaspar Insurance Services. We insure small and mid-sized businesses and handle their insurance needs.
Today I am going to talk a little bit about general liability insurance, what exactly it is, and how much you need as a business owner. Having general liability insurance is the absolute basis of any insurance. I would say that if you could only afford to have one insurance, I think for most businesses general liability would be the insurance they would get. It is the absolute foundation to having your business insurance in place.
Essentially, general liability insurance is the protection you have in the event you're responsible, or your business is responsible for causing damage to a person or to property. And this can happen in a number of different ways.
One of the most common is with a vehicle accident. Let's say your company trucks gets into an accident. You hit somebody and damage their car, and let's say they get injured. If they file a lawsuit against you, that's covered under your general liability insurance.
Along the same lines, let's say you are manufacturing a product of some kind. Let's say for instance that you are a pistachio distributor. If you distribute pistachios and the people that eat them end up getting sick, let's say you get sued in a class action lawsuit for your product hurting somebody. That also falls under your general liability insurance.
So as you can see, it can cover a few different scenarios that can be extremely important in protecting your business in the event that a lawsuit like this occurs.
Now when it comes to how much general liability insurance you need, there are a couple of things that dictate exactly how much coverage you want to get. For most people, especially when you are first starting out in business, usually this is going to be dictated by your landlord or the vendors that you do business with.
When you move into a new place, whether it be an office or retail store or warehouse, generally speaking, your landlord is going to ask for at least one million dollars per occurrence, and two million dollars aggregate just to get started. And what those limits mean is that any single lawsuit or claim that you file, you're going to have one million dollars in coverage for that single occurrence that happens. If you are unlucky enough to have two occurrences in a single year or more, the policy is going to cap out at the aggregate.
Another key thing you want to look at in regards to how much insurance you get, is how much your vendors want you to have. Let's say you are a clothing distributor, if you do business with big clothing stores like Nordstrom's for instance, they might require you to four or five million dollars in general liability insurance because they want to make sure that they are protected in the event that something wrong happens with your product.
So even if you are a small business, and let's say you don't have a whole lot of assets, you may have to get a lot of coverage just to make the people you do business with satisfied with the type of insurance you have.
Now also, in regards to figuring out how much general liability insurance you should have, certainly the limit on your insurance should grow as your business grows.
I'm Tim Gaspar with Gaspar insurance for Business.com making sure that you have the right business insurance coverage for the right price.
Things to know about general liability:
• General liability = basis of any business insurance
• It covers damage to persons/property
• Often required by landlords or vendors
• Make sure the limits grow as your business grows