If your business handled a job with multiple contractors and the building caught fire, do you know that if not determined who cause the fire you and all other contractors could be at risk for being sued? If this were to happen do you have the proper insurance to handle it? Liability insurance or often called general liability insurance is an insurance policy a business would get to protect themselves in the event of the business being sued. It is very important to have as it protects business assets. There are some projects you would be denied for if you did not have this policy. Here are for basic things you need to know about liability insurance.
What General Liability Actually Is
A business would get a general liability policy in addition to a Business Owners Policy (BOP). A BOP is an insurance package that bundles property, business interruption insurance, vehicle, flood, and liability insurance together. Having this policy satisfies the basic insurance a business would need to have. This is often cheaper than purchasing the insurance products alone and offers the lowest coverage necessary for the small or medium business. This is where the general liability insurance option comes in handy. If a business feels the need for additional coverage they may purchase an additional liability plan.
How to Determine if You Need to Purchase Additional General Liability Insurance
With so many lawsuits, it's wise to purchase as much insurance suggested in your business industry. This is time to consult with general liability insurance providers. Some people believe that the standard offered in a BOP is sufficient coverage. This is not the case as that is an industry average. This may be a sufficient coverage option for someone just opening the business but as time goes on and your business continues to grow you should reevaluate your coverage limit. Others may think they don't need additional coverage because they work mostly assisting with other projects. In this case you would find the contractors may add you onto their policy as well for that project only. You should always look out for yourself though.
If you were to be sued with insufficient coverage it's too late to upgrade your policy. Your policy would pay the max should they feel this claim is warrant and valid and you will be left to pay an out of pocket difference. This can be thousands of dollars so it's important to take this into careful consideration when determining purchasing the extra insurance.
What if General Liability is not Enough
If you have maxed out on the coverage amount available for general liability, there is another option called excess or umbrella insurance. As the name implies your coverage limits are increased. If your maximum coverage amount is $250,000 and you are sued for $200,000 in fees associated with a fire and another $75,000 in legal fees that's a total of $275,000 you are being sued for. You need to come up with an additional $25,000.
How to Choose a General Liability Provider
Prior to searching for your provider, take a look around and assess your risks for your business. It's always good to have an idea of what you may need. When choosing a general liability provider, it's always best to find one that specializes in your industry. Find one that is reputable, licensed and looking out for your best interests. They will know the exact coverage amounts you will need. Keep in mind that the declarations page show's your different limits. If the insurance providers are not pointing out these differences to you they may not be the provider you need.