Today’s society is so litigious, and consumers are so knowledgeable about their rights, that you as a business owner can never predict when a lawsuit may come your way. Such a lawsuit, if it succeeded, could completely devastate your business. You cannot avoid the risk of this happening, but you can and should take out commercial general liability insurance, and let the insurers take the risk on your behalf.
Commercial general liability, or CGL, insurance is usually obtained through a commercial property and casualty insurance agency, and provides you with coverage for lawsuits that may be brought against your business. It is designed to cover claims for various categories of business liability. These include bodily or physical injury and damage to property, personal injury – which involves damage to someone’s reputation through slander, libel or defamation – and misleading advertising claims. The bodily or property damage can take place on your premises, or be caused off the premises by an employee carrying out work for the company elsewhere.
The main types of damages that can be covered by a commercial general liability insurance policy are compensatory damages, which cover the claimant’s financial losses, and general damages, which cover the intangible or non monetary losses, such as mental stress, or pain and suffering. In some states, including Florida, the insurance will also pay punitive damages awarded against your business, but in many states punitive damages are not payable. CGL insurance does not cover injury claims from your own employees, or claims relating to vehicles used for your business, so you will need separate policies for both of these areas.
You can either buy CGL insurance on its own, or as part of a Business Owner’s Package or BOP, which will be less expensive. However, the BOP has a lower level of coverage than the separate policy, so whether it is better for you will depend on your level of risk. For instance, obviously the risk levels for a manufacturing plant operating heavy machinery will be higher than those for a floristry business, and the manufacturing plant would be better advised to take out a separate policy.
One industry in which risks are considered particularly high is the construction industry. In Florida, construction contractors are required to carry a policy with minimum coverage of $300,000 for bodily injury and $50,000 for property damage, whereas for other types of business the requirements are $100,000 and $25,000 respectively. However, the requirements can vary from city to city, and in Tampa, for instance, contractors are required to carry a CGL policy of $2 million for total incident coverage.
The biggest problem for contractors with commercial general liability insurance is that they often find payouts are refused for claims involving accidents, or occurrences, arising from defective workmanship or negligence. This is because different states have different definitions of what constitutes an occurrence, with some states refusing to accept that a construction defect is an accident or occurrence, because it is not unintended or unexpected. However, several states, including Florida, have ruled that a construction defect can be considered an occurrence under the policy, provided it was not intended by the contractor. In Florida, therefore, a construction business can feel safe in taking out CGL insurance.
When you are looking at commercial general liability insurance, there are a number of steps you can take to keep your premiums down, such as keeping your employees fully trained in safety procedures, keeping detailed and comprehensive records, and maintaining high standards of quality control. What you must not do is try to manage without a policy, or you will be leaving yourself and your business very vulnerable. You should reduce your premiums to the minimum, and then regard the insurance as an essential business expense.
Call our third generation commercial insurance agent to find the best rates on commercial general liability insurance available for the Tama Bay area at (813) 962-3082