When you start the process of insuring your small business, you will want to get coverage that is both cohesive and affordable. One solution that can meet both these needs is a business owners policy (BOP). It is designed to specifically insure small businesses with several essential benefits in one policy and at a single premium.
Among the essential benefits offered by most BOPs will be Commercial General Liability (CGL) Insurance. It’s designed to kick in when you make mistakes that, however unintentional, wind up harming others, such as your customers. It will make sure that they receive the compensation they deserve without putting you in the way of significant losses.
Though CGL benefits are very far-reaching, you should not consider them the end of all means when it comes to getting appropriate liability benefits. Consider the coverage that your BOP’s plan will offer, and don’t forget to invest in additional benefits, which at times might prove essential.
Liability Insurance in Brief
If you are liable for something, then you are responsible for it. Within your business, you are liable for all aspects of your operations, including your interactions with the public.
To insurers, your liabilities might equal cost risks. After all, if an incident that negatively affects a customer, vendor or other party, then it might be your responsibility to respond appropriately and help them with their recovery. However, these costs might cause a significant financial blow to your bottom line. Still, with the help of liability insurance, you will be able to have assistance meeting these financial obligations.
Coverage Within a CGL Policy
A CGL policy is the most basic form of liability insurance, and it is applicable in almost every business operating today. It is called general liability insurance not because it is simple, but because it applies to the third-party claims that are most likely to arise in any business.
The benefits within a CGL plan are very expansive, and usually apply to liabilities like:
Bodily Injuries: If your mistakes cause someone else to get hurt in the business, this coverage might pay for their medical bills or related recovery costs. So, if you forget to mark a wet floor and someone falls in the puddle, hurting themselves, then this coverage can compensate them for their losses.
Property Damage: The business might damage someone else’s property. For example, a carpet cleaner might apply the wrong solvent to someone’s floors, causing severe damage. This coverage can help pay to repair the damage.
Personal Injuries: Sometimes, the business’s actions might cause reputational harm to someone else. Therefore, if the person alleges you committed libel or slander against them, then this coverage can help you repay that person.
Advertising Injury: Your advertising might improperly target a competitor, client or other individual. It might also result in copyright infringement. Your CGL policy can repay those affected by your mistakes.
Product Injury: If you manufacture products, and these products harm a consumer, then the consumer might sue you. This benefit will provide restitution.
Completed Operations: If you provide a service to a customer, then that service might cause a problem even after you have completed your work. For example, if you are a plumber and make a mistake when installing piping for a customer, then that mistake might lead to household flooding. Because you are responsible for the customer’s loss, your completed operations coverage can pay.
Legal Assistance: Your CGL policy will usually assist you with your legal fees, settlements and other costs related to a lawsuit. A lawsuit might prove totally baseless, but that doesn’t mean you won’t need assistance as you try to fight it.
Medical Payment: Sometimes, the business will have no fault in someone else’s injuries, even if that person gets injured on the premises. Medical payments coverage is a feature of some policies that will help you cover these third-party costs, regardless of who is at fault.
All BOPs will vary, namely in the coverage limits that they offer for different losses. However, it’s easy to work with your agent to choose CGL limits that are most appropriate to your individual loss potential.
Plus, while setting policy limits, you can also familiarize yourself with any potential gaps in coverage. Though CGL policies won’t cover everything, you can still augment your plan with additional benefits that are ready to fill those openings.
Expanding your CGL Policy
Once you have your BOP, you will know where your base of liability benefits lies. At that time, you can consider additional liability coverage that will help you cover further loss scenarios that are often more niche, and merit special benefits.
Additional liability policies that you might need include:
Errors & omissions (E&O) coverage
Directors & officers (D&O) liability insurance
Employment practices liability insurance (EPLI policies)
Cyber liability insurance
Hired/non-owned auto liability insurance (which can also be added to commercial auto insurance policies)
Umbrella liability insurance
Sometimes, you can add these benefits as endorsements within the BOP itself. However, in other scenarios, you must buy these benefits separately. In either case, additional liability benefits are often essential to your business’s long-term financial security. Therefore, don’t hesitate to work with your agent to maximize your benefits.