Common General Liability Claims

If you’re wondering whether your business really needs general liability insurance, it’s important to look at the common claims that arise from general liability issues. If you don’t have this coverage, your business—or you—will be paying out of pocket for expensive medical bills, property damage and possible legal fees if an accident occurs.

Some of the most common general liability claims are as follows.

1. Theft

   Burglary and theft can occur even from inside a business. It’s crucial to have safeguards such as heavy anti-theft systems and extensive background checks, but even then, thieves can be unpredictable. This is the most common claim.

2. Advertising injury

   Injuries to a company or person’s reputation is often the most expensive type of general liability claim, averaging at $50,000. While this type of lawsuit is not as common as others, it can be detrimental to a business due to the cost. Advertising injury also covers libel, slander, copyright infringement, stolen ideas and more.

3. Bodily injury

   Customers slip and fall often, especially in restaurants and grocery stores. Paying for medical bills and possible legal fees can rack up fast without general liability insurance. These lawsuits average at $20,000.

4. Property damage

   Property damage liability can happen in many ways. Say you rent a space for your auto-workshop and a heavy piece of equipment damages the floor by accident. Your landlord may sue for the damages, which is where property damage liability steps in.

5. Product damage or injury

   Not everything works as it should. If you sell or provide a product that causes bodily injury or property damage, you could be sued. For example, Altria Group Inc. was sued in 2002 for not warning customers of the dangers of smoking tobacco in cigarettes. A customer discovered she had lung cancer and sued the company for $28 million and nine years of the lawsuit. This was an outlier, of course, but product damage lawsuits can still be costly. The average cost of such a lawsuit is $35,000. Not every business can afford to pay for a lawsuit over several years or compensate for the damages their products may cause.

   Businesses in every industry face some sort of liability risks. Some are more apt to be sued than others, however. Industries such as construction, restaurants, medicine, law and accounting are all likely to be sued concerning general liability. There are other types of liability risks, however, including:

• Cyber Liability: A lot of companies operate primarily or solely on computers now. Unfortunately, computers are open to viruses, cyber attacks and other events that threaten client information and more. Cyber liability protects a business if a cyber attack causes a loss or leak of private client information.
• E&O Insurance: General liability doesn’t usually cover negligence, which is where E&O insurance comes in. E&O insurance, or Errors and Omissions insurance, protects the business when lawsuits arise out of negligent acts on behalf of the business that cause clients to lose money. This often occurs in professions such as accounting.
• D&O Insurance: Directors and Officers insurance protects the business when a lawsuit is filed against a director or officer on the company’s board. D&O claims typically involve alleged mismanagement of the board.
• Umbrella Liability: Some businesses need more liability insurance than others. Umbrella liability insurance covers the cost of a claim when your primary liability insurance reaches its maximum. For example, if your business is sued for $2,000,000 but your general liability insurance only covers $1,000,000, umbrella insurance will help pay the remaining $1,000,000. This is important for industries that have a long history of lawsuits.