General Liability: Are You Properly Covered?

General liability is an essential type of coverage for a business owner. If you run a bakery, manufacture a product or have clients come to your office,
there is a liability exposure. Commercial general liability insurance in California comes with six different components of coverage. Diagram of business insurance

 

Following is a sample of  liability coverage page for someone with a $1 / $2 million policy limit.

  • General Aggregate – $2,000,000
  • Products-Completed Operations Aggregate – $2,000,000
  • Each Occurrence – $1,000,000
  • Personal and Advertising Injury – $1,000,000
  • Damage to Premises Rented to You – $500,000
  • Medical Expenses – $10,000

The General Aggregate and Each Occurrence categories correspond with each other.

If there is a general liability claim (Each Occurrence) such as a slip and fall at the grocery store, it would contribute to the General Aggregate.
There can be two claims of this type, up to $1 million each, before the “Aggregate” limit of insurance is exhausted.

The Each Occurrence limit corresponds with the Products-Completed Operations Aggregate limit. If a customer swallowed one of your products, like food or small plastic piece, and got became ill, this claim would fall under the Products-Completed Operations Aggregate limit of insurance. As with the General Aggregate limit, there can be two claims of this type, up to $1 million each, before the limit of insurance is reached.

Personal and Advertising Injury provides coverage for oral or written material that may be libelous or slanderous or that copies another companies advertisement, logo, slogan or other artistic work so closely that it can be confused with the original, as well as discrimination or humiliation that ruins someone’s reputation. The limit of coverage on claims of this type is $1 million. There is no General Aggregate limit provided.

If you are renting the space for your business and you accidentally cause a fire that destroys part or all of the building, the limit of Damage to Premises Rented to You will cover this cost. This coverage is sometimes called Fire Legal Liability. There is no aggregate on this limit either. Insurance carriers offer various limits on this one. Some may offer half of the Each Occurrence limit, while others may offer up to the same limit.

If there is a minor accident that results in some small injury or damage, Medical Expenses will pay the claim, no questions asked, up to the limit of insurance.

Higher limits are also available. Many companies offer $2 million to $4 million limits, and some are even beginning to offer $3 million to $6 million limits as well. Depending on the limit, other types of coverage listed would be increased proportionately as well.

Deductibles do not apply with liability insurance as they do in property insurance. Insurance companies establish  minimum premiums for commercial general liability insurance in California.  Prices in California start around $450 to $950 for a minimum coverage policy. The actual costs will depend on the size and risks associated with your business.