Commercial general liability, commonly thought of as the “slip and fall” coverage, insures a business against accidents and injury that might happen on or away from its premises, as well as certain exposures relating to the carrying out of its business operations.
It will protect you from payments for bodily injury or property damage to a third party, for medical expenses accruing to the underlying incident, for the cost of defending lawsuits including investigations and settlements, and for any bonds or judgments required during an appeal procedure.
Why do I need it?
Just as you would not operate a car without adequate liability insurance, you should not operate a business without basic commercial general liability insurance. To do so would be leaving yourself and your business vulnerable to lawsuits that could prove to have crippling effects on your finances and assets.
When we advise clients that commercial general liability insurance is a necessary cost of doing business, we occasionally receive the response that “No one comes to my office premises, therefore I don’t need this insurance.”
The thing to remember is that your liability insurance follows you and your employees when you go off site. For example, let’s say that you are meeting a client at their home in order to go through a proposal for a contract. Upon entering the client’s home, you remove your footwear and place it at the top of a flight of stairs leading to the lower level of their home. While you are meeting with your client, their precocious 3 year-old toddler goes to descend the staircase and trips on your boots and tumbles head over feet down the stairs. While the child lives, he suffers permanent spinal injury that will leave him paralyzed from the neck down and confined to a wheelchair for the rest of his life. Your client will likely sue you for the injuries your negligence caused their child, and you can bet the monetary amount their suit will not be minor in measure.
Similarly, the actions of your employee at a job site might result in bodily injury or property damage to third parties, putting your firm at risk for lawsuits.
Consider the impact of an uninsured loss on your company’s operations, including payments for bodily injury or property damage to a third party, as well as the associated medical expenses, lawsuits, investigations, settlements, bonds or judgments required during an appeal process.
Is the potential loss you could suffer worth the risk you take by not carrying any or enough insurance?
How much do I need?
Considering the trend towards increased frequency of lawsuits as well as the higher judgement amounts, our advice is always to buy as much as you can afford to pay for.
Project owners are demanding higher limits for design professionals, usually anywhere from $2M to $5M. The logic behind their requirement for your firm to carry coverage is based on their concern that their insurance may be forced to respond in the event that you do not carry sufficient coverage. Similarly, if you lease office space, your landlord will require confirmation of your commercial general liability insurance. Project owners and landlords often request an endorsement to your commercial general liability policy where they are shown as additional insured.
In deciding how much insurance to carry, you should keep in mind that if you are a sole proprietorship you can be held personally responsible whereas in the case of corporations, only the firms assets may be seized if a judgement is made against it.