As you consider insurance coverage for your small or mid-sized business, it’s important to be aware of which types of coverage are mandatory and which aren’t. At the same time, it’s vital to note that, even if you aren’t legally required to carry a certain type of policy, having more extensive coverage can nevertheless be a benefit to your company.

A good case in point is general liability insurance. In this post, we’ll define what this coverage is, and offer some guidelines on if and when it’s necessary.

What is General Liability Insurance?

General liability insurance protects your business in the event that a client or customer claims property damage or physical injury, specifically as the result of your product, service, or professional environment.

Without general liability insurance, your business may be on the hook to pay any damages, replacement costs, or medical expenses that customers incur as a result of your product or service.

General liability insurance provides businesses with an important safety net, allowing them to cover legal fees or settlements that result from a liability suit.

Is General Liability Insurance Required By Law?

While general liability insurance is usually not required by law, there may be situations in which an accrediting body, lessor, client, or licensing board requires a certain level of coverage. Businesses should be aware of these situations.

Also be aware of some potential exceptions, scenarios in which the law actually does mandate general liability coverage. For example, there are some states in which general liability insurance is required for construction contractors and developers.

Some other situations in which general liability insurance may be necessary include:

• In most states, real estate agents need general liability insurance in order to maintain their license. The same can be true for other professions that require professional licensure at the state level, such as accountancy and dentistry.
• If a larger company hires you as their subcontractor, or to serve as the vendor for a large-scale project, you may be required to show proof of general liability coverage.
• In some situations, you may need general liability coverage in order to apply for a lease, whether for commercial retail space or just office space.

Consider the Advantages of General Liability Insurance

Even if you’re not required by law or by an accrediting agency to have general liability coverage, doing so can be a signal to customers and partners alike that you are trustworthy and dependable. As such, it’s something that we recommend to a majority of our business clients.

Questions about general liability? We’re happy to chat. Reach out to FullHR at any time.