When Is General Liability Insurance Required?

General liability insurance is one of the many useful insurance policies that is not typically required by any state or federal law. This coverage can protect your business if it is held responsible for injuring a third party (e.g., customers, vendors and the public) or damaging their property. Although this coverage isn’t always required, there many circumstances in which your business might need general liability insurance. Keep reading to learn more.

Industry Requirements
In some cases, you may have to purchase and carry general liability insurance if your business belongs to a certain industry. Many sectors have specific requirements that business must meet in order to legally operate. These requirements may apply to an establishment’s size, workforce, licenses, permits and insurance coverage. Be sure to check your industry’s requirements when looking to start a business or get a license in a certain field, as you may need general liability coverage and other commercial insurance policies.

Who Needs General Liability Insurance?
Essentially every business needs general liability insurance. This includes businesses such as restaurants, retail stores and offices, among others. Having a physical business location or physically interacting with others are the top reasons to secure general liability insurance. If you allow customers into your business and someone gets injured on the property, for example, general liability insurance can help cover the resulting expenses (e.g., medical payments and legal costs).

What Does General Liability Insurance Cover?
General liability insurance offers the following forms of coverage:

Bodily injury liability coverage—This coverage can compensate expenses stemming from injuries that a third party may face on your business’s property. Namely, it can cover medical costs related to such injuries.

Property damage liability coverage—This coverage can reimburse costs related property damage that a third party may experience due to your business’s actions.

General liability insurance can also help protect your business against lawsuit costs related to third-party bodily injuries or property damage—such as defense costs, court fees and settlement expenses.

What Does General Liability Insurance Not Cover?
General liability insurance is intended to cover non-professional, negligent accidents. Apart from general liability insurance, your business may need to secure additional coverage to protect against other liability concerns.

Be sure to ask your insurance agent about extra liability coverage your business may need, such as:

Professional liability coverage—Professional liability insurance covers claims regarding professional negligence. If your business or employees offer a specialized or professional service, you will need professional liability insurance. This may be required for you to receive certain professional licenses.
Liquor liability coverage—Liquor liability insurance covers claims against the business concerning the selling or manufacturing of alcohol. If someone purchases alcohol from your business, becomes intoxicated and gets into a fight which causes injuries, for example, liquor liability insurance can protect you against a related lawsuit. This insurance is often required for businesses that plan on selling or manufacturing alcohol or to obtain a liquor license.
Directors and officers liability (D&O) coverage—D&O insurance covers key employees of the business in case of a claim regarding their activities on a board of directors or as a representative of the business. This insurance can cover claims such as fraud, misrepresentation, mismanagement and more.

Ask an insurance agent today about protecting your business with liability insurance. No two businesses are the same, and you will need coverage tailored for your business.

When Is General Liability Insurance Required?

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