General liability insurance is a type of business insurance that provides protection against financial loss arising from claims of personal injury or property damage. It is a fundamental form of risk management to help safeguard businesses.
Businesses, regardless of size, often consider general liability insurance essential to protect themselves from the financial consequences of unforeseen accidents or incidents. The insurance protection is often considered a fundamental aspect of risk management
How does general liability insurance compare with product and public liability insurance?
General liability insurance, public liability insurance
, and product liability insurance
can be interchangable terms. In North Amercica the commonly used term is general liability insurance, whereas in the UK it is more common to break the covers down into public liability and product liability. Below we'll take a closer look into each of the different coverage sections.
What does general liability insurance cover?
In the event of accidential injuries or property damage, general liability insurance provides cover for legal defence costs, medical expenses, damages awarded by a court, and settlements agree with the insurer.
Covers liabilities for injuries sustained by third parties on the business premises - public liability insurance
Covers liabilities related to products the business manufactures, sells, or distributes - products liability insurance
Covers property damage to third-party property caused by the business or its employees - public liability insurance
Some general liability business insurance policies will extend cover to advertising injury for commercial companies. The cover can provide protection against claims related to non-physical injuries such as libel, slander, false statements about a competitor, infringement of copyright, or other forms of false advertising or misleading statements. However, if you provide a professional service it is recommend that you purchase professional indemnity insurance
, otherwise known as professional liability insurance, because the cover will be inadequate to meet your needs.
What are the different types of liability insurance?
Public liability insurance provides financial protection against claims arising from bodily injury or property damage of persons other than your employees in the course of your business activities.
Product liability insurance provides financial protection against claims arising from bodily injury or property damage as a result of a fault with a good you have provided.
Employers liability insurance, otherwise known as workers compensation insurance, is seperate to general liability insurance and provides protection against claims arising from injury or illness at work.
General liability insurance examples
Product liability insurance claim
A company that manufactures and sells electronic gadgets, including a popular brand of smartphones. One day, it becomes apparent that a batch of smartphones has a manufacturing defect that causes the devices to overheat and, in some cases, catch fire. Several customers experience property damage, injuries, and even some cases of more severe harm due to these incidents.
The affected customers decide to file a lawsuit against the smartphone manufacturer, seeking compensation for medical expenses, property damage, and other losses. The claims allege that the defective smartphones are responsible for the damages and injuries. In this situation, the manufacturer's product liability insurance (otherwise known as general liability insurance) would come into play. Product liability cover is designed to provide indemnification to businesses from financial losses associated with claims arising from the manufacturing or selling of defective products.
Public liability insurance claim
A bakery that operates as a small business in a busy commercial area is the target of a compensation claim. A customer is walking into the bakery when they accidently trip over a loose floorboard near the entrance. The customer accidently falls and sustains injuries to their person, including a broken wrist.
The injured customer decides to bring a legal action against the bakery, seeking compensation for medical expenses, lost wages, and pain and suffering. The claim alleges that the bakery was negligent in maintaining a safe environment for customers, leading to the customer's injuries. In this situation, the bakery's public liability insurance (otherwise known as general liability insurance) would respond. Public liability cover is designed to cover claims arising from third-party injuries or property damage that occur on the premises of a business or as a result of its operations.
Do you need a commercial general liability insurance certificate?
Your business insurance broker or insurance company can provide you with the relevant insurance certificates
to meet your counterparty requirements for commercial general liability insurance. This letter will provide evidence of your insurance by outlining the key covers provided, policy numbers, insurance company, amount of cover offered.
Other small business liability insurance:
About the author
Simon Taylor is a respected senior industry professional and a Chartered Insurance Broker with over 20 years’ of experience in the commercial insurance sector as an underwriter, broker and director.