General liability, also called commercial general liability insurance, is an insurance product offered to small businesses to protect them from specific risks.
Many factors can influence how much insurance you need, including:
- Business type, including the products and services you provide and the processes you use to provide them
- Business location, including climatic zone
- Business structure – whether you operate as a sole proprietorship, partnership, or corporation
- Business activities
General liability coverage can be purchased as a standalone policy or bundled with other coverages within a Business Owner’s Policy (BOP).
What’s Generally Covered?
Typically, general liability insurance provides protections against the costs associated with the following risks:
- Bodily injury lawsuits and medical costs
- Personal injury lawsuits for libel, slander, or disparagement by you, or your employees
- Advertising injury such as copyright infringement, piracy, or violation of privacy rights
- Property damage caused by your products, premises, or operations
General liability coverage allows your company to continue operations while your company deals with claims of negligence or wrongdoing, whether real or unfounded.
It can cover the legal expenses incurred while defending and settling claims, regardless of who is at fault.
Additionally, it can pay for medical expenses if someone injures themselves on your property, through the use of your products, or through your business operations.
Does My Small Business Require General Liability Insurance?
While you aren’t legally required to carry general liability insurance, you should definitely consider it.
Certain business structures and financial arrangements can make general liability insurance a contractual or lender requirement.
Even if it isn’t required, it is highly-recommended in most cases.
For instance, you most certainly should buy general liability insurance if clients visit your office or home, or if you visit them off-premises.
You also need it if you have employees that conduct business off-site.
Regardless, most small business owners should include general liability insurance in their expenses for several reasons.
First, many small businesses do not have the financial capacity or resources to cope with the revenue losses or penalties caused by an ongoing lawsuit.
Even legal costs may bankrupt a business, regardless of whether or not it is at fault.
Second, your business may be liable for damages caused by a variety of reasons you can’t anticipate.
You could be sued due to erratic actions of an employee.
Someone could also sue your company if your product or service seems too similar to their own.
You could face a lawsuit if someone trips on an office doormat, falls, and hurts themselves.
If your services are perceived as harmful by a client, they could sue you for compensation, even if that isn’t the case.
The point is, even if you are a prudent business owner, lawsuits are an ever-present risk that you can’t easily protect yourself against alone.
Considering the reasonable cost of general liability insurance, it is not advisable to ignore these very real risks.
They’re costly, resource-depleting, and in some cases, can put your personal assets at risk too.
Small business owners may avoid general liability insurance due to cost.
However, the cost of coverage depends on many factors.
This includes the level of risk associated with your business.
For instance, a heavy equipment manufacturer has a greater perceived risk than a manufacturer making stuffed animals.
An e-commerce business may have less perceived risk than a brick-and-mortar company.
If your business operates in an area known for large claim payouts, you will probably pay more.
Equally, you will pay higher premiums if you deal with dangerous products.
However, most companies will find the cost of general liability insurance very affordable.
Bundled with other coverages within a Business Owner’s Policy, there is usually value in it considering the exorbitant cost of a lawsuit or medical expenses.
Did You Know?
If you operate a sole proprietorship or partnership, you have the same legal responsibilities and liabilities as a large corporation. You need robust insurance to protect your assets, because your business structure is not a separate legal entity. A third-party claim puts your personal assets at risk, unless you have general liability insurance.
Small Business General Liability Insurance Providers
General liability is available from countless insurance providers and brokers, both online and offline.
The following is an overview of three Canadian providers:
1. Zensurance
Zensurance in an online insurance brokerage that allows you to get a quote online, anytime.
They have over 100 employees across Canada, available 24/7 if a business owner needs support.
Their website also claims they offer the best commercial insurance coverage for the best price, since they can access over 50 insurance carriers, both in Canada and abroad.
Their search engine compares prices from companies such as Aviva, Chubb, Lloyd’s, and Travelers, finding you the best coverage at the best rates.
They also aim to explain insurance jargon in plain English, so you can understand their recommendations and your policy coverage easily.
2. Victor Insurance (formerly Encon)
Victor Canada is a member of Victor Insurance Holdings, one of the largest general underwriters in the world.
They have provided liability insurance to companies for more than 50 years in Canada.
They focus on the enterprise and small business segments, and claim to be a leader in the development and distribution of innovative insurance solutions.
They also state they provide “inhouse claims expertise, an online learning centre, and one-on-one guidance from our team of experienced underwriters”.
Victor has physical offices in Edmonton, Ottawa and Mississauga, with more than 240 employees.
However, coverage is available through licensed insurance brokers throughout Canada.
Their products include a stand-alone commercial general liability policy and policies that compliment existing professional liability or E&O insurance, and CGL specifically tailored to contractors.
3. Intact Insurance
Intact Insurance is Canada’s largest home, auto and business insurance company.
They have a coast-to-coast presence through insurance brokers.
They offer a small business package called Liability EDGE.
It includes 13 coverage extensions for enhanced commercial general liability coverage.
Policyholders can customize their coverage to include trademark infringement, product recall, employment practices liability, and other protections specifically suited to their business.
