General Liability insurance is basically used by businesses which have a chance of getting sued by their customers for lack of performance of services. It is said that the real essence of democracy is a really good system of justice. In the past few decades, consumer revolution have led to faster decisions by the courts and legal system. This has prompted several customers to file suits against their businesses in cases where the performance of the service was not satisfactory or an accident was experienced as a result of the product or services. Businesses thus, often tend to cover up the expenditure of such proceedings with the help of comprehensive general liability insurance. The cost is decided by taking into consideration the model of the business. Two principal expenditures that are reimbursed by such a policy include, the cost of proceedings and the cost of compensations.
Cost of Coverage
As mentioned above, the coverage of such policies vary according to the nature of the business and also according to the operation of the businesses. For example, large companies that provide services and products to other larger companies, usually tend to have a coverage that has a much higher premium and compensation, as the legal proceedings and compensations tend to be very expensive. Similarly, medial practitioners such as surgeons and physicians also tend to have expensive coverage and premiums. The insurance for other businesses such as gymnasiums and food chains tend to be cheaper in comparison to the larger companies. The small business insurance is tailored as per the needs of the business. For example the average cost for home-based child care ranges from USD 300 to USD 700, annually. On the other hand, the photographers pay about USD 1000 as an annual premium. Thus the premiums for small businesses differ from case to case.
Types of Coverage
In cases where the business gets sued, the insurance companies provide a compensation for the following damages.
- Bodily or Physical Damage: In cases where the customer sues the business for physical injury, medical expenses, trauma compensation, and comprehensive personal injury compensation are to be provided by the business. The policy premium is usually the total of all the aforementioned compensations.
- Property Damage: The property damage compensation that is provided by the insurance company as a coverage is basically for the damage of the customers property.
- Personal Injury: The personal injury is a monetary compensation that is provided for insults, physical and mental trauma that the customer had to suffer.
- Advertising Injury: The last type of compensation is covered by a majority of policies, is the advertising injury. Such a compensation is awarded by the court for misleading and inappropriate or rather unethical advertising.
Calculating Insurance Cost
On an average, a small business insurance and the policies for big businesses have these 4 elementary coverage. Unfortunately, there is no rule of thumb regarding the coverage which prevents me giving you any premium figures. The best way to find out is to get a quote which would be tailored as per your businesses nature and usual operations. Apart from the aforementioned coverage elements, these policies can be tailored as per the need of the business, only the general liability insurance cost would increase as a result. Some additional coverage aspects include, defense costs (lawyer fees), Employment Practices Liability (regarding employment practices), misrepresentation and misinterpretation, premise and operational liability, product liability, etc. Such coverage can be used to reduce the sudden financial burden that is brought about as a result of lawsuits. This may seem to be an unnecessary expenditure. However, it tends to protect the business from sudden and unexpected liabilities that are brought about as a result of lawsuits.