While some have more than others, every business has exposure when it comes to general liability claims. How much general liability insurance a business needs will depend on its assets and revenues, operational risks, and contractual obligations. Every business is unique, so it’s important to discuss your general liability needs with an insurance expert.
Do I Need General Liability Insurance?
In many cases, general liability insurance isn’t required of business owners, but it certainly is a fundamental coverage to have that protects business assets and revenues as well as personal assets and income.
Instances where general liability coverage is required include:
- Lease agreements: Require businesses to maintain a minimum amount of coverage
- Client requirements: Some clients will not work with businesses that don’t have general liability insurance
- Government contracts: Public entities won’t do business with a company that doesn’t have a designated amount of coverage
In some contract situations, small business owners can get a waiver on getting general liability insurance, but this doesn’t eliminate the risk of a lawsuit and major claims.
How to Evaluate Your Coverage Needs
General liability policies start with $100,000 of coverage. This amount can go up to $300,000, $500,000, $1 million, or more. Getting the right amount of general liability insurance is contingent on several factors:
- Check contractual obligations: Most lease agreements and contract terms that require general liability insurance often set the minimum at $1 million per occurrence.
- Understand your business risk: Evaluate how much foot traffic you have and what types of hazards are common. For example, a garden store may have puddles often from watering plants that are slip-and-fall risks.
- Evaluate your risk tolerance: Look at the amount of assets your business has to pay common claims such as a slip-and-fall accident valued at $20,000 or more. If you have assets to cover common claims, you may opt for lower coverage.
How to Boost Coverage Without Increasing Limits
You may want higher liability coverage, but you don’t want to increase the limits on your general liability policy. Keep in mind that doubling the liability limit will not double the premium, but there are cases where you’ll still want it increased through a commercial umbrella policy.
The commercial umbrella or excess liability policy takes the policy limit and adds at least another $1 million in coverage to it. This is most useful when a company has more than one liability policy, such as commercial auto and professional liability. The umbrella policy increases the liability limits of all underlying liability policies without increasing each one individually. It’s the most cost-effective way to increase coverage across multiple policies.
Having a trusted insurance expert show you how you can save using a commercial umbrella policy is invaluable. The Hartford is a small business specialist and can get you a general liability and commercial umbrella policy that meets your business’s needs. Getting a quote takes only a few minutes.
Many factors affect how much general liability insurance you will need to protect your business. Even for businesses that aren’t required to have general liability insurance, the benefits of coverage far exceed the disadvantages of paying a claim out of pocket.