Commercial general liability coverage is a complex subject depending on the business to which it applies. Examples would be a small retail store that requires third party liability to cover a slip and fall type exposure only or right up to a large manufacturing firm that requires a wider range of liability coverage to cover its completed products and operations.
Any situation where a person attending at or using a service provided by the business or purchasing a product from the business can claim that the product, service or advise caused them financial or physical injury or harm. A single claim can literally wipe out years of hard work building up a business. Even if you have done absolutely nothing wrong and your product has worked exactly has it was supposed to, the cost of defending an action against your business can run into the tens of thousands of dollars. It only makes sense to make sure that you are protecting the business that you work hard daily to build. Despite this many small businesses are operating without any commercial general liability coverage and many are doing so because they are under the mistaken impression that the cost of the insurance is too high to warrant paying it. Having seen first hand the consequences of not carrying proper coverage I would not recommend that to anyone.
Each business must be assessed as to the exposures that their particular industry presents. Your broker must take into consideration your operations, your product, the source of your materials or products if obtained from a different supplier, where that supplier is located, whether you have alternative suppliers or do you depend on a single outlet, whether you manufacture your product of wholesale it only. Do you repackage the product and sell under your label or do you retail under someone else's label. Where do you sell your product or service and what is the amount of gross sales in each area. How many employees do you have and do they need to be added as additional named insured. Do you own the building where the business is located or are you a tenant renting the location. Do you offer a warranty on your product or are there warranties offered by the original supplier.
Each individual industry has it's own inherent liability exposures and your broker must address all of them in order to place the proper coverage. Endorsements such as completed products and operations, limits for equipment, stock and electronic data equipment, boiler and machinery coverage, installation floater, employee benefit liability and non-owned auto liability coverage are but a few of the coverage's that need to be considered.
Certain industries also need to look at Professional Liability coverage. This is often referred to as Errors and Omissions Insurance. Many service oriented businesses such as hairdressers and beauty salons, home inspectors, general insurance brokers and other professional service providers require this type of coverage due to the nature of advise that they render to the clientele.
When you compare premium rates for commercial general liability insurance it is important to make sure that you are comparing the coverage provided by each policy and that the coverage being provided is appropriate for your business.
Yours truly,
Kenneth R Greig CFP. CAIB. RIBO.
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