You can compare commercial general liability insurance, a form of small business liability insurance, to third-party or liability insurance for your car. If you buy a car you have to buy a third-party insurance policy. The purpose of the policy is to pay for damages to other people or cars in case of an accident, not damages to you or your own car. It protects you from being legally liable to pay their costs out of pocket. Commercial general liability (CGL) insurance provides the same sort of protection for your business.
If you own even a small office or workroom and someone comes into it and then falls and injures himself, he could sue you for medical costs. If you use equipment on someone else’s property, say you’re fixing their roof but then you drop your ladder and it goes through their window, they could sue you for the costs of those damages. Of if someone thinks your advertising has infringed on a copyright or slanders their reputation, you could also be sued for that. In all cases, whether the lawsuit is justified or not, your CGL insurance will pay legal costs and whatever monetary damages are awarded.
Remember that even frivolous lawsuits are expensive ones. Winning doesn’t mean you will get all your legal costs back, and it certainly won’t get you back the headache and time that preparing for the suit cost you. If you have proper insurance then you can simply hand it over to them and let them battle it out. In a small business, your personal assets are liable for seizing, so you are protecting more than just your business.
CGL insurance does not protect against deliberate wrong doing. If you vandalize someone else’s property or behave in a willfully negligent manner your insurance company will refuse to cover the claim.
If you own even a small office or workroom and someone comes into it and then falls and injures himself, he could sue you for medical costs. If you use equipment on someone else’s property, say you’re fixing their roof but then you drop your ladder and it goes through their window, they could sue you for the costs of those damages. Of if someone thinks your advertising has infringed on a copyright or slanders their reputation, you could also be sued for that. In all cases, whether the lawsuit is justified or not, your CGL insurance will pay legal costs and whatever monetary damages are awarded.
Remember that even frivolous lawsuits are expensive ones. Winning doesn’t mean you will get all your legal costs back, and it certainly won’t get you back the headache and time that preparing for the suit cost you. If you have proper insurance then you can simply hand it over to them and let them battle it out. In a small business, your personal assets are liable for seizing, so you are protecting more than just your business.
CGL insurance does not protect against deliberate wrong doing. If you vandalize someone else’s property or behave in a willfully negligent manner your insurance company will refuse to cover the claim.
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