General liability insurance is a key part of protecting your business. It covers you against risks like customer injuries, property damage, and advertising liability that could potentially lead to costly lawsuits. However, not all insurance policies are the same, and choosing the right one requires a bit of homework.
Here are five essential questions every business owner should ask before purchasing general liability insurance:
1. What Does the Policy Cover?
Understanding exactly what your policy covers is critical. General liability insurance typically protects against claims involving bodily injury, property damage, personal injury (like libel or slander), and advertising issues. However, some policies might exclude specific risks or industries. For example:
- Does the policy cover damage to rented office space?
- Will it handle claims related to your online advertising?
Make sure to review your policy carefully and clarify any exclusions with your insurance provider.
2. What Are the Coverage Limits?
Coverage limits determine the maximum amount your policy will pay for a claim. Most policies have two types of limits:
- Per Occurrence Limit: The maximum amount payable for a single claim.
- Aggregate Limit: The total amount the insurer will pay for all claims within the policy period.
Ask yourself:
- Does the per occurrence limit provide enough financial protection for my industry risks?
- Will the aggregate limit cover multiple claims in a single year?
Ensure the limits align with the size of your business, the industry you’re in, and the potential risks you face.
3. How Much Will It Cost?
Cost is a significant consideration when choosing insurance. Your premium will depend on factors like the size of your business, industry, location, and claims history. Here’s how you can better understand what you’re paying for:
- Get Multiple Quotes: Comparing quotes from different providers can help ensure you’re not overpaying.
- Ask About Deductibles: What amount must you pay out-of-pocket before the insurance kicks in? A higher deductible often leads to lower premiums but could leave you with a bigger bill in the event of a claim.
- Understand Additional Costs: Are there any fees for policy changes or add-ons you might need later?
4. Does It Cover My Industry-Specific Risks?
Some industries have unique risks that require additional coverage beyond a standard general liability policy. For instance:
- Construction companies may need coverage for damage caused by subcontractors.
- Retailers might want protection against slip-and-fall claims.
Ask your insurer if you need separate policies or add-ons like product liability insurance, professional liability insurance, or cyber liability insurance to fully protect your business.
5. Can It Grow With My Business?
Your business today may look very different a year from now. Ask your insurance provider about the flexibility of your policy:
- Can you adjust your coverage limits as your business grows?
- Are there options to add more coverages as you expand to new locations or take on new services?
Choosing an insurer that can scale with you ensures your business remains protected as it evolves.
Final Thoughts
General liability insurance is a fundamental safeguard for any business, big or small. By asking the right questions, you can choose a policy that not only protects you today but also keeps up with the demands of tomorrow.
Still unsure about the right coverage for your business? Give yourself peace of mind by connecting with an insurance expert to help you tailor a policy that fits your unique needs. Protect your business smartly and stay focused on what you do best.