The Basics of General Liability

The Basics of General Liability

| June 16, 2020
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General liability is a commercial insurance product which offers protection for the business for injuries to a person or persons from defective products, wrongful death or even slip and fall accidents and damage to another's property.   

Limits 

Per Occurrence limits state the amount a policy will pay up to for any one claim.  

Per Aggregate limits state the amount a policy will pay over the policy’s duration (commonly, one year). 

Combined Single Limit (CSL) includes one limit for injuries to a person or persons and damage to another’s property.  This is separate from the split limits mentioned above (occurrence and aggregate). 

Limits can range from $100,000 and up, with $1,000,000 per occurrence being the most common requirement to meet the needs of a contract.  

Example of Split limits: 

$1,000,000 liability limit for personal and advertising injury (any one person)

$1,000,000 aggregate on products and completed operations 

$2,000,000 general aggregate (other than products-completed operations) 

$100,000 damages to premises rented to you (any one fire)

$5,000 medical expense limit (any one person) 

Example of CSL limits:

$1,000,000 each occurrence (injuries and property damage) 

Additional Insured Endorsement

An Additional Insured is not the owner of the policy, but who, under certain circumstances, may be entitled to some of the benefits and a certain amount of the coverage.  For example, while working on a particular job or project, a contractor, their officers, directors and employees  may require to be listed as an Additional Insured on a General Liability policy. If there are numerous Additional Insured, a Blanket Additional Insured coverage may be required.  Average cost per Additional Insured is $150.  

What determines cost?  

The liability rate is usually determined by these items:

Service businesses, like contractors, cleaning services, etc:  Annual payroll or number of employees.

Retail and Manufacturing, like mercantile, etc:  Gross annual sales.

Office and Rental businesses, like doctor’s or attorney offices, etc:  Square footage or the number of units. 

Audits

Most general liability premiums are based on estimates provided by the policyholder at the beginning of the policy year.  At the end, an audit is done to verify and/or confirm estimates provided initially were accurate.  If they were accurate, then no additional premium due.  If they were understated, the policyholder will owe additional premium at the end of the year.  If they were overstated, the policyholder may receive a credit toward their renewal policy or a refund.  Many times the audit results will be adjusted on the renewal policy, particularly if they were overstated or understate.  

Adjustments

Some carriers allow adjustments to be made to the policy during the year, particularly if the number of employees and/or payroll increases, or if an additional location is added.  

Coverages may differ per state or per company.  Contact your agent to learn what options are available for your business. 

Learn More

Contact one of our licensed business insurance specialists to learn what works best for your business:  1.800.886.0305.  Let our experts help you tailor your business insurance to your business! We are here to help! 

Consultative Insurance Group   |   consultativeinsurance.com   |  “Consultative...It’s the way we do business!”

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