General Liability Coverage- Does your client have the right insurance?

The Insurance Information Institute – biz journal revealed that 40% of small businesses don’t have any commercial insurance coverage. At the same time, insurance journal found that out of 75% of companies operating in the US, 40% percent are woefully underinsured. In such a business climate, you must realize that your insured might not have General Liability Coverage.  

In fact, they might not even have a clear understanding of their General Liability Coverage limits, to begin with. And with no commercial liability coverage, the threat of a lawsuit hurting your client financially is very real.

Insurance can be a difficult topic to navigate through. Throw some misconceptions into the mix, and it can expose your insured to various risks. Risks that their coverages might not be able to handle. Such situations can put your neck in the line as well.  

So, what are some misconceptions of General Liability Coverage? 

Let us take an example: 

A business owner asks their employee to run an errand for them. They then send the employee in their car to complete the task. On the way, the employee meets with an accident. Here is how the scenario will play out. Since the use of the vehicle was for commercial purposes, personal auto insurance will not cover the damages. And since the injured person was an employee, the commercial liability coverage will also not handle any claims. Why? Because that would require a worker’s compensation coverage.  

The business owner would then just be waiting for a lawsuit to happen. 

So, what can you do? 

Communication is the key. As an agent, it is, therefore, up to you to teach your clients the nuts and bolts of their General Liability Coverage.  

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What isn’t included by the liability coverage?

Here are some claims that General Liability Coverage will not cover for your client:

  • Damage to own property
  • Professional errors
  • Employee Injuries
  • Vehicles used by business
  • Employee discrimination claims

Make sure your client is both loss-proof and lawsuit proof. Now that we traversed the world of misconceptions surrounding General Liability Coverage, let’s talk about the limits you should be discussing with your clients. Which brings us to the next question:

What kind of commercial liability coverage limits should you convey to your clients? 

Let us take an example: 

Your client works as a carpenter. They have liability coverage with a $2 million aggregate limit of liability per year. Due to errors in their work, they got sued twice. Both times, your client had to pay compensation of $1 million each time. Now, if your client gets sued for the third time, they will no longer have coverage. Why? Because they have exhausted their aggregate limit on their policy. In such a scenario, they are exposed to the threat of losing their business. And any other commercial insurance will not help them.

Various limits come with General Liability Coverage. You should always be ready to fill in these limits for your insureds. The ones you should communicate to your clients are: 

  • General aggregate limit 
  • Each occurrence limits 
  • Medical expense limit 
  • Damage to premises rented limit 
  • Products-completed operations aggregate limit 
  • Personal and advertising injury limit 

How can you fill in these policy limits? 

Only clarifying liability coverage policy limits is not enough to help your clients. As a seasoned insurance agent, you can help walk them through some options they can consider. What could the solution be? Simple – insurance endorsements. Besides mandatory endorsements, it is best if you help an insured choose endorsements that best suit their needs.  

Some common endorsements to General Liability Coverage include: 

  • Adding or changing a location 
  • Increase in limits 
  • Additional insured 

So, the next time you have a potential insured looking to get General Liability Coverage for their company, you can run them through coverage details and their limits. After all, you want to provide them the best possible coverage that secures them as well as their business. 

Do you agree with our suggestions? Let us know your thoughts in the comment section. 

Learn how you can flourish as an agent after one call!

Schedule a call right now and learn how you can ease your work, sell more, and increase your profits!

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