Insurance Policy
General Liability Insurance Policy
A lawsuit against your business can occur for almost any reason: negligence, personal injury, libel, slander, errors, omissions, faulty products, advertising misprints, etc
Protection
The General Liability Policy protects your business from these types of claims. It pays your:
- Legal fees
- court judgments and/or
- negotiated settlements.
It pays these expenses if they are the result of:
- property damage,
- bodily injury and/or
- personal and advertising injury
Understanding General Liability Policy
The general liability policy is referred to as a “Third Party” coverage because it pays the expenses and the actual court award that arises out of the insured’s legal obligation to a third party. The cause of the claim is an accident that occurs on or arises from:
- premises you own, rent or use
- the conduct of your operations away from premises you own, rent or use
- the use of or exposure to products you manufacture or distribute
- the use of or exposure to work you have completed away from premises you own, rent or use
- work done on your behalf by independent contractors and/or employees.
All businesses need general liability insurance. However, it is important to note that general liability policy does not include coverage for professional liability claims.
The general liability policy responds to liability claims from allegations where the legal standard of care is based on the reasonable prudent Man standard. If the liability allegation arises out a professional standard of care., the general liability policy will most likely not cover the claim
The General Liability Policy is Audited at Expiration
In purchasing the general liability policy it is important to not only consider the initial cost of the coverage but the potential for significant additional cost when the policy is audited after the expiration date.
General Liability Premium
General liability premium is based on an exposure base that the insurance company
believes best measures the risk insured by the policy. These exposure basis include:
- Units
- Square Footage
- Payroll
- Independent Contractor Costs
How It Works
At the beginning of the policy period, the insured will give the insurance company an estimate of the exposure base. The insurance company will then apply a rate to this estimate to determine the initial premium. At expiration, the actual exposure base during the policy period is calculated during the audit. If the exposure is higher than estimated, the insured pays an additional premium. If it is lower, the insurance company gives the insured a return premium unless the policy was quoted subject to a minimum earned premium.
Understand Your Premium
Because the general liability policy like the workers compensation policy is subject to audit, it is important to know both the full annual premium and rates being used to calculate your premium.
Learn More
For more information on premium basis that can be used for a general liability policy, here is a link to an excellent guide developed by the Travelers Insurance Company.
Expand Your Coverage
Are you confident your current insurance program includes Equipment Breakdown? Give us a call to analyze your current coverage. We can show you options that expand coverage without increasing cost.