Why do I need general liability insurance?
Do you have a physical office where clients or vendors occasionally stop by? Do you visit your clients at their offices? Maybe your company has a blog or utilizes other social media outlets. Or perhaps you produce a physical product that is used by your customers. What about custody of other people’s property…does your product or service require you to have control over your client’s belongings, like their servers?
All of these situations (any too many others to list) expose your company to liability from third parties. By this we mean the risk that you or your company could be held accountable after your business activities cause harm to another. Companies protect themselves from these risks through general liability (GL) insurance.
If you have a lease for office space or any number of other commercial contracts, chances are you’ve already heard of this policy. The counterparties to your contracts want to know that you have the backing of a general liability insurance policy in the event of a dispute between you and them.
Clearly GL exposure is massive for almost any company. If you can think of any situation where your company or any of its employees is directly or indirectly responsible for the safety of others or another’s property, you’re exposed!
What is it?
Put simply, general liability insurance protects your company from some of the fundamental risks that come with running a business. These include:
- ‘Slip and fall’ claims: a vendor visits your office in your coworking space, trips on a power cord and hits his head.
- Property damage: your visit your client’s new space bearing housewarming gifts of coffee and muffins. On your way through the office, you accidentally spill the coffee onto some high-end computers and monitors, not to mention the brand new carpet.
- Products liability: your shoe company has sold 10,000 units. Suddenly reports come in that a manufacturing defect is causing the heel of the shoe to detach and customers are getting hurt. You’re sure that, since the shoes were manufactured in China by a Chinese company, you’re off the hook. The pained look on your lawyer’s face makes you think you may be wrong…(you probably are).
- Damage to rented space: you shut down your office for a long weekend not realizing that you’ve left a space heater on. It’s not a very good space heater: a fire sparks, destroying most of the office. Your landlord sues for the damages.
- Personal injury: while speaking to a potential client, you make a regrettable comment about a competitor. The competitor finds out and considers your comments to be slanderous.
- Advertising injury: in an email blast to your full mailing list, you use a catchy tag line to get people’s attention. It works! But unfortunately you inadvertently plagiarized another company’s content and they come calling.
GL will cover a wide range of risks by paying for the costs of litigation as well the costs incurred by the injury. These costs can include court-awarded damages, settlements, and medical costs.
At Founder Shield we can customize the policy to include or exclude specific exposures depending on unique nature (and budget) of your company. For example, the policy can include coverage for personal injury resulting from a blog post (important for most tech companies) and exclude coverage for property damage from the use of fireworks (probably not quite as important).
How do I protect my company and myself?
Want to read more on the subject? Check out our blog posts on general liability insurance.
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