Definition: Insurance coverage that protects against claims against the
insurance holder of property damage, personal injury, negligence
and so on
Customers, employees, repair people, delivery people and anyone
else who comes in contact with your business property can hold you
liable for your failure to take the proper degree of care. This can
be as simple as keeping your sidewalk swept or shoveling the snow
on your front walk. If someone is injured as a result of your
negligence, the court will generally find in favor of the injured
party, even if your negligence was only slight.
Basically, there are two types of liabilities against which you
have to insure yourself and your business: liabilities to
nonmembers of the firm and liabilities to members of the firm
(employees and partners). Most of the liabilities toward outsiders
will be covered under a comprehensive general liability (CGL)
policy. A CGL policy covers the following four risks:
- Payments due to accidents and injuries that might happen on
your premises or to your employees;
- Any immediate medical expenses necessary at the time of the
accident;
- The attorney fees and expenses for investigation and
settlement;
- The cost of court bonds or other judgments during appeal.
The limits to liability are determined on a per-accident and
per-person basis. Additional limitations may include a total on
bodily injury or property damage.
A CGL policy does not protect you against all liabilities,
however. These include:
- Liability caused by an employee automobile
accident while on the job;
- Liability related to products manufactured or
sold, or services offered, by your company;
- Liability insurance covered under workers'
compensation laws.
For these, you'll need additional insurance coverage and should
contact your insurance company to determine exactly what coverage
you need.