Operating a small business today without insurance is a risky proposition. The U.S. Small Business Administration has estimated that between 36 and 53% of small businesses find themselves involved in litigation each year. You’ve also likely encountered clients in the field who have requested to see your Certificate of Insurance before hiring you. These are among the many compelling reasons to protect your business against financial losses with liability insurance.
The next step is comparing General Liability insurance quotes to find the right fit for your business. You’ll undoubtedly have a lot of questions along the way, especially if it’s your first time purchasing a policy. Thankfully, you can use those inquiries to help you establish what you really need.
Ask yourself these six questions as you shop for liability insurance.
1. What perils does General Liability insurance cover?
Before you can choose the best General Liability coverage for your small business, it helps to understand the risks your business faces and which financial losses fall under this type of business insurance.
Here are the three types of accidents typically covered by General Liability coverage:
Bodily Injury: Your company is held liable for injuries sustained by a third party, such as a client or a member of the public, due to negligence. Your policy will cover expenses including medical bills, missed work, rehabilitation, and legal costs if the case goes to court. For example: a janitor for your cleaning company just mopped the floors in the lobby of a commercial building; someone slips in a leftover puddle, badly injuring their elbow.
Property Damage: Your company is held liable for property damage sustained by a third party. Your policy will cover the cost of repairing or replacing the damaged property, plus costs associated with a lawsuit. For example: the newest employee at your landscaping company accidentally lets a ladder fall against a client’s garage door, damaging the frame and some of the garage’s contents.
Personal/Advertising Injury: Your company is held liable for personal injury to another individual or company — which can include libel and slander, malicious prosecution, copyright infringement, and more. Your policy will cover legal expenses and settlements against you. Here’s an example: a competitor takes you to court, alleging you based your logo on their copyrighted design.
It’s important to note that General Liability insurance covers accidents arising from the general negligence of you or your employees. This is different from Professional Liability insurance, which is meant to cover financial losses stemming from errors or omissions made in the course of your services.
2. Which activities are covered under this policy, and which are excluded?
Bodily injury, property damage, and personal injury are the three broad categories of coverage you can expect from any General Liability insurance policy. Meanwhile, individual policies will specify exactly which activities are covered and which are excluded.
A liability policy for landscapers may cover tree trimming from the ground level while excluding fallen tree removal or trimming from a lift. A policy for a furniture assembly company could cover jobs related to putting together all types of furniture except cribs and bunk beds, due to excessive risk. A policy for photographers could cover activities inside their studio or on location, but exclude any activities related to using a drone to capture footage.
It’s important to understand exactly which activities a policy includes and excludes before purchasing it.
3. How much coverage does my business need?
When you’re buying a liability policy, you will need to choose a limit — the maximum amount your policy will pay out in the event you file a claim. The exact amount of coverage you need depends on a few things, namely the size of your company, the level of risk involved in your work, and the minimum liability clients or landlords will expect from you.
Say you own an event planning company. While someone planning their wedding may be satisfied by a $1 million policy limit, a business hiring you to plan a large corporate conference may require you to have $2 million in coverage before they’ll sign on with you.
These limits sound high, but medical bills and property damage can become very expensive very quickly. Assess what your organization would need to defend itself and pay settlements, factoring in the inherent riskiness of your day-to-day work.
4. How much will premiums cost, and what deductible should I set?
Commercial General Liability insurance cost is an important factor to consider when comparing quotes. As a small business, you’re trying to protect your business on a limited budget. The price of a policy will depend on its limits and the deductible you accept — the amount you’re willing to pay out of pocket for damages before your policy kicks in.
A policy with a $500 deductible will be more expensive than a policy with a $5,000 deductible. Why? Because you’re shouldering more risk in the latter scenario. As a result, the monthly premiums you pay to your insurance carrier will be lower.
A general rule of thumb is to set your deductible to an amount you could comfortably afford to pay if a mishap did occur. You want to find the sweet spot where your monthly premiums are manageable and you’re protected from financial catastrophe if the worst-case scenario were to occur.
5. Do I need liability insurance full time or per job?
In years past, business insurance was purchased annually. Entrepreneurs have more flexible options today. Thimble offers General Liability insurance coverage for many types of small businesses by the hour, day, week, or month. This represents a lower barrier to entry from a cost perspective if you can’t afford an annual policy or aren’t sure if you will have a steady stream of work.
Some small businesses need around-the-clock coverage based on the nature of their work. Others may opt for coverage on a job-specific basis. For example, a DJ can now purchase insurance that spans the length of a single event lasting a few hours. A part-time yoga instructor could purchase insurance only for the days on which they’re leading group classes.
Evaluate your insurance needs, and find a policy that matches the way you work. This will help keep the cost of Commercial General Liability insurance reasonable without sacrificing your financial security.
6. What is the process for filing a claim?
Before committing to a policy, look into how to file a General Liability insurance claim with a given company. The aftermath of an incident can be a stressful time; you’ll appreciate having a provider on your side who’ll communicate quickly and transparently. Then you can track your claim and receive a claim payment in a timely manner if it’s approved.
To file a claim on a Thimble policy underwritten by Markel Insurance Company, you can:
— Email email@example.com
— Call the Markel Claims hotline at 800-362-7535
— Fax 855-662-7535
Are you looking for flexible coverage to protect your small business? Learn more about Thimble and get your own General Liability insurance quote today!
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.