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Why You Cannot Afford Not to Have General Liability Insurance


We live in a society that is sometimes considered overly litigious, or “sue happy”. Businesses are a common target for even the most frivolous of lawsuits. They may be seen as having the means to pay off a claim and so less consideration taken for the person behind the company whose assets are at risk. This is one of the reasons that shortly after establishing a business you may be asked if you have purchased liability insurance. General business liability insurance is a policy that protects the investment of a business owner from the cost of a legal case. It is considered a
worthwhile investment even for contractors who do not need a full business owner’s policy. The annual premiums for general liability insurance are based on factors such as sales amount and risk factors. They are generally a couple thousand dollars or less and far less expensive than the cost of defending even one legal case.


Any business that employs others automatically has a higher risk of lawsuit. Consider that with each additional person involved in the business there is an increased potential for damage or injury. This is true even of accidents and non-neglectful incidents. Another consideration is the interaction between employees since there are cases where even an allegation of sexual harassment can be financially devastating. Though general liability insurance does not cover employee injuries like a workers compensation policy, it protects against damages caused by the employees themselves.

Product/Service Issues

It’s is nearly impossible to avoid an issue with your product or service. At some point a customer will be unsatisfied. When these situations escalate to a legal matter defending your business can be financially devastating. Legal issues with products extend beyond damage or bodily injury that is caused. General liability insurance also covers claims of slander, libel, copyright infringement, and false/misleading advertisement.

Rented Property

Businesses that rent or lease property for their operations can be held responsible for damages or injuries on the site. You can be held liable for accidents that occur on the property even if they are not directly related to your business. A simple fall by a passerby can result in high medical and legal fees. If you do not operate a traditional brick and mortar shop, the same rules and coverage apply to any place you conduct business. This includes if you visit a client’s location and damages to their property or an injury occur.

The Cost of Legal Fees

Liability policies offer coverage for legal fees. Any situation in which an allegation must be defended will result in legal costs, these can be astronomical. This is especially true when considering that lawyers encourage their clients to pursue the most profitable settlement possible. These clients may not be required to pay up front court costs further motivating them to file a case for an alleged issue. It is also not uncommon for a judgment to include an order for the defending business to pay all legal costs associated with the case if they fail to prove their case.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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