Learn how commercial general liability insurance aids in safeguarding your LLC against potential claims relating to bodily injury, property damage, and more.
Blog
August 20, 2024
If your business is designated as a limited liability company (LLC), which helps protect your personal assets like your home, personal bank accounts and property from business bankruptcy or legal judgments, you may still want to help protect the business itself from business-related liabilities. Business insurance can help protect businesses from financial losses due to certain covered events, which may be unexpected.
The following is a discussion of common business insurance policy types to consider.
What is Commercial General Liability Insurance for an LLC?
A Commercial General Liability Insurance (CGL) policy helps protect a business, such as an LLC, against financial liability arising from certain third-party claims. While the terms and conditions of each policy may vary, this type of insurance commonly covers the LLC for third party claims alleging property damage, bodily injury, and personal injury.
A CGL policy can be an important risk management tool to help mitigate potential legal expenses, medical costs, and compensation claims that may arise from third-party accidents, injuries, or property damage caused by the LLC's operations, products, or employees. This type of insurance can help provide financial protection for the business and may even be required by certain contracts with partners and/or vendors, for example.
What Does a CGL Policy Typically Cover?
The terms and conditions of each policy may vary, but Commercial General Liability policies typically cover an LLC for the following types of third-party claims:
- Bodily Injury
- Property Damage
- Personal Injury
- Product Liability
- Completed Operations
- Advertising Injury
In addition, CGL policies typically cover:
- Legal Defense Costs
- Third Party Medical Expenses
Here are a few example scenarios where Commercial General Liability Insurance for LLCs could be beneficial:
Slip and Fall Accident: A customer visited the office location of a business and accidentally slipped on a wet floor, resulting in a broken bone. A CGL policy would typically cover any resulting medical expenses and potential legal fees if the customer decided to file a lawsuit against the business.
Property Damage: While performing a service at business client's location, an employee of the business accidentally damaged expensive equipment or property of the client. If the client brought a third party claim against the business, the CGL policy would typically cover the cost of repairing or replacing the damaged property.
Product Liability: An LLC manufactured and sold a product that was later found to have a manufacturing defect, causing injury or property damage to consumers. CGL would typically cover the costs of legal defense, medical expenses, and potential compensation claims.
Having Commercial General Liability Insurance coverage helps ensure that an LLC is protected against a range of potential liabilities, allowing it to continue operations regardless of unexpected claims.
Other Business Insurance Coverages Available for an LLC
Business Owner's Policy (BOP)
Why would you want to consider a Business Owner’s Policy if you have an LLC? A BOP combines Commercial General Liability coverage with Commercial Property coverage in one policy. A Commercial Property policy helps business owners protect the value of a covered building and its contents (such as furniture, equipment) and exterior fixtures features (such as fences) against covered losses.
If your LLC has business property, you may want the broader coverage option that a BOP provides rather than a CGL policy alone.
Professional Liability Insurance
Professional liability insurance may be right for you if your LLC business provides professional advice or professional services to others. Also known as errors & omissions (E&O) insurance, professional liability insurance can be an important risk management tool for accountants, architects, and consultants, for example. Professional liability insurance can help provide financial protection for companies and professionals if a client alleges their work is inadequate or they committed a negligent act in the course of providing professional services.
Cyber Insurance
Data breaches and cyber attacks are a concern for many businesses of all sizes. For example, it can be difficult if a customer’s data was stolen or if ransomware hijacks your system. A cyber insurance policy can help cover the costs associated with data breaches and cyber attacks.
Commercial Auto Insurance
If your business involves driving to client sites or delivery of goods by company car or truck, commercial auto insurance is an important type of insurance to consider. Commercial auto insurance helps provide coverage for vehicles owned by the business and varying coverage options may include, collision, liability, comprehensive, personal injury, medical payments, uninsured/underinsured motorist.
Having Commercial General Liability Insurance coverage helps ensure that an LLC is protected against a range of potential liabilities.
Should I Get Commercial General Liability Insurance for my LLC?
Having the right business insurance in place is an important risk management tool. Having CGL coverage for your LLC should be a consideration as it helps protect against financial liability arising from certain third-party claims.
Contact us to connect with an agent who understands your business and can help provide it with the coverage solutions it needs, or request a commercial general liability insurance quote online now.
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