Coverage of General Liability Plans

Coverage of General Liability Plans

The coverage of general liability plans is actually designed for businesses which are in industries where accidents can frequently occur. Because of the nature of their business, a sufficient protection is the only answer to their predicament. This insurance plan offers benefits such as legal defense and medical payment assistance when the need arise. Such benefits could protect a business in facing costly lawsuits that can lead to company bankruptcy.

The Benefits of the Plan

Business owners and professionals using this plan are actually handing over their risk of financial accountability to the insurance companies. The protection can go this way, if a claim against the insured is made, the insurance company will conduct the investigation to rule out what is frivolous and unjust. Once the insured goes to court, the company’s attorney’s costs are paid by the insurer. Once the insured is liable, the insurer will pay the award amount, up to its coverage limit. It becomes a sure win-win situation for insured companies and professionals.

Detailing the Coverage

The general liability insurance plan protects insured companies from countless and numerous risks. These risks would include; employee injury, bodily injury, loss of limbs or life, property damage, damages to personal non-physical injury that could result from slander and libel, and fire damage to property. It also covers the insured’s lose of income while fighting insurance claims in court.

The scope of coverage is so wide it also covers the actions of the insured’s staff, its employees and even independent vendors, freelancers, merchandisers, promo-disers and some contractors that work on behalf of the company.

Basic Considerations Given to the Plan’s Applicants

Not all plan applicants get automatic approval and given coverage of this type insurance policy. Generally, insurance companies have several factors to consider before deciding a grant or a denial to an applicant. Some of the major determining factors for a potential applicant would include; the applicant’s business location, the amount of coverage, the type of industry the applicant ventures into, and the history of its previous claims. Though there may be more factors to consider, these are the most important ones that can determine viability of coverage.

If an applicant company is considered to pose higher risks for the insurance company, the insurer may approve the plan but premiums extended in exchange for the coverage can be higher than the normal rate. Some high risk companies can go as high as five times the normal rate, while extending only minimal limits.

To Clear Some Misconceptions about the Coverage

The coverage of the general liability insurance plan basically includes a wide array or numerous types of risks. We have mentioned these risks above in the coverage section of this article. But there are some incidents that can be mistaken as part of the coverage under this plan.

This insurance policy also cover damages that results from copyright infringement or personal injury suffered from publishing some false information. However, it is a misconception to believe that it covers errors and mistakes in designs or some omissions made by companies and professionals.

These types of risks have separate policies like the professional liability and errors and omissions insurance plan that protects companies and professionals.

A word of advice to companies and professionals

To have a general liability insurance policy to protect a business is a sound and responsible management decision. But to have sufficient coverage can be equally important to pay for claims or lawsuits in case it happens. When award amounts or settlements exceed the coverage limit, the insured party will be required to pay the outstanding balance out of their pocket.

Having an insurance policy is paying for protection against future occurrence of such problems.  These are problems that we don’t want to happen or cannot afford to let it happen and would never tolerate to happen.  This is why we have the general liability plans.