If you have a business in Texas, whether it be a startup or an established organization, General Liability insurance (GL) is a type of insurance coverage you would want for your business, regardless of the industry that you are operating in. It’s surprising to see the number of companies that are failing to purchase a GL insurance policy for their business. In this guide we will answer some of the basic questions you would need to know about general liability insurance policies and why you should have one, if you don’t already. You can then speak to an insurance consultant to set up an appointment if you do not have one for your business already. At Texas P&C, we understand that predictability is not a luxury a business can bank on, and even though we want your business to go through only good times, it’s best to be ready for tough times. Prevention is better than cure as the proverb goes and signing up for a general liability insurance policy is certainly one way to prevent your business from adverse selection.
1. What is a general liability insurance policy?
Commercial General Liability (CGL) insurance, or a general liability (GL) insurance as it is commonly referred to, is an insurance policy that helps a business when it is being sued by another party. There are a few different ways that a company can be sued by another party, and a general liability insurance policy comes to the rescue when it is time to address the complaints of those parties.
2. What is covered under a General Liability insurance policy?
While there could be a plethora of ways your company can be sued by a third-party, a general liability insurance policy covers 4 main types of situations in which your company would be liable for a claim.
1. Bodily injury & property damage
2. Personal injury
3. Medical payments
4. Tenant’s legal liability
Bodily injury is when an employee of your firm accidentally causes damage to a third-party, or when a customer injures himself at your business property. A classic example is when a customer slips and falls in your store. Another commonly observed situation is a construction worker employed at your firm dropping a tool on a passer-by. These are situations we all want to avoid, but there’s no going back when the unfortunate deed has already taken place. A general liability insurance policy will come in handy in these types of situations, which is why you need to have one.
Personal injury liability is something many of us confuse time and time again. A personal injury liability occurs when you, as the owner of the business, or an employee of yours abuses another company or a person via written or verbal means. We all try to have a good standing with our peers at all times, but things might go south every now and then. A general liability insurance policy will come to your rescue if you were not aware the claims made by you or your employee were untrue at the time of claiming so.
Medical payments will cover for any payments that are accrued due to an injury caused to an employee on your premises, which is one of the most significant costs many businesses undertake in Texas. It’s very important to have an insurance policy to cover these types of payments so that your company’s financial performance does not take a hit from adverse, unplanned occurrences.
3. General Liability is the Landlords first line of defense.
If you are a landlord, not only should you have a GL policy to protect your business interests in the property your lease, but each of your tenants should also have that coverage, naming you as additional insured, in order to protect both their interests and your. Each of your rental contracts should call for adequate GL coverage from each tenant you rent to. We are experts at Landlord/Tenant insurance risks and can help you navigate these murky waters.
4. What are the claims not covered from a general liability insurance policy?
Signing up for a general liability insurance policy might give you the false impression that it covers all the liabilities that could arise as a part of the daily operations of your business. At Texas P&C, we always work hard to ensure our existing clients and potential clients understand the true nature of all the insurance policies we provide access to, and it’s important to note that there are certain types of liabilities that would not be covered under a general liability insurance policy. The very first point that needs to be understood is that a general liability insurance policy cannot be claimed for a damage that is caused by your carelessness, as the business owner, or one of your employees. In the same way, if your business operations damage the property in which the business is run. This is not covered by general liability insurance policies. Such policies provide cover for damages that occur to a third-party’s property only. These are some of the basic functionalities that need to be understood by the buyer of a general liability insurance policy. Let Texas P&C help you find the best insurance fit for you business.
4. How are insurance premiums treated for tax purposes?
Premiums paid for general liability insurance policies are considered by the Internal Revenue Service (IRS) as tax deductible in most cases, as these costs are considered a cost of running the business. This tax treatment should benefit any company that signs up for a general liability business insurance policy. However, the best practice is to take advice from an experienced tax consultant for further advice, and at Texas P&C, we always promote working with experienced consultants in all business decision making processes as it can help you reduce unnecessary costs and save precious time for your business.
5. Are there any other benefits of signing up for a general liability insurance policy? More often than not, we come across clients who believe that the sole purpose of obtaining an insurance cover for their business is to protect from adverse developments in the future. However, there are other benefits associated with opting in for a general liability insurance policy. For example, this could help your business grow. In the recent past, it has been common for large scale companies to hire sub-contractors and other small companies to complete work on behalf of them, which is often referred to as outsourcing. However, before awarding such contracts to small scale companies, these large companies often assess whether there is a general liability insurance cover in place.
We believe now you have a thorough understanding of why you need to sign up for a general liability insurance cover. It is equally important to work with a renowned insurance broker to ensure you are given quality advice regarding the best insurance policy that matches with the requirements of your business, and the nature of your business operations. Feel free to check our general liability insurance offering and contact us for more information.