WEDNESDAY, OCTOBER 14, 2020
As a rule, general liability insurance isn’t typically required by state or federal outside of vehicle regulations. While any vehicles owned or used by your business must be covered under liability insurance according to the state, your business itself may not be legally required to carry commercial general liability.
This doesn’t mean you won’t need it, however. There are other instances where you may be required to carry general liability insurance outside of state or federal mandate, including:
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Landlords renting out business or event properties requiring that their tenants carry general liability insurance.
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Certain professional guilds and unions requiring that you carry general liability insurance.
While there may be official mandates on insurance within your industry, they are not typically going to be legally binding until you've signed a contract. You may be required to carry insurance if you want to work with a certain distributor or rent a certain location. But beyond concerns like these, you're essentially free to handle the risks of owning a business however you like.
However, it is not recommended that you operate a business without some measure of general liability insurance. General liability insurance covers a variety of dangers that face businesses across industries every single day. Without the right coverage, you could face out of pocket expenses for accidents and lawsuits costing thousands or even millions of dollars. This can be especially detrimental to new businesses that do not have the cushion of savings to handle such unexpected costs.
General liability insurance covers three main areas: bodily injury, property damage and personal or advertising injury.
Some factors to consider:
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The average slip and fall claim costs around $30,000 to $40,000
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The average customer injury claim costs around $35,000
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Reputation harm claims can cost an average of $50,000
Maybe a multinational corporation can easily cover all that out-of-pocket, but the average small business might not. Remember that you are going to be covering your own legal fees as well. Just having a lawyer look at the case is likely to wind up costing you more than your annual premiums would have been.
Protecting your business so that you can realize your dream is crucial. Make sure to speak with an insurance agent about the risks facing your business so that you can get the right coverage.
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It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional
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