In the world of commercial business insurance there are many different things that come into play. Things such as what business type you own, what services you offer, all the way down to where you’re located and who you service can all be factors that dictate what you need in an insurance policy and why.
I am Nevin Shennett and I have been in the insurance industry for four years. For three years I have owned my own insurance agency. In that time I have written countless commercial insurance policies for many business owners. In that time I have been asked quite often, why is general liability coverage important? This is a great question that every business owner should understand.
Why is general liability coverage important?
What is it used for? Why do I need it? As a business owner, you operate in a world that is completely motivated by business. Most business owners know that there are stipulations and requirements that come along with that world. No matter what business you operate or what type of clientele you service, general liability coverage is going to be of use to you and your business.
One important reason why general liability coverage is important is for job requirements and appearances to prospective clients. As a business operates and provides products or services, many potential clientele will have a general liability requirement that must be met before a contract will be drawn up or before the services of a business can be considered on a corporate level.
This requirement can be placed along a vast range of values that usually change based off of the field in which the business operates within and the service they provide. For example, most businesses that have a requirement for businesses whom’s services will be used have a minimum of one million dollars of general liability coverage as a requirement.
This requirement is usually the most basic coverage that is required for low risk businesses such as graphic designers and small catering operations. The nature of the business that is done in these fields and fields similar to these do not run the risk of needing very much more coverage in any given situation than one million dollars worth of coverage to be utilized. Therefore, the requirements for these types of businesses tends to be lower.
On the contrary of smaller businesses, larger businesses will usually have much higher requirements for doing business with another entity. For example, if a car dealership that carries seven million dollars worth of inventory on hand at any given time decided to partner with another car dealership, the requirements that the original dealership may have to even allow a partnership to be discussed may be in the neighborhood of ten million dollars worth of general liability coverage necessary in order to proceed. In this case, this requirement is set so high simply because the risk that is posed by so much money in inventory being exposed to the business practices of another entity far outway the business opportunity itself.
The original car dealership is fully aware of what they stand to lose if the partner company does not have the proper coverage. These are the things that businesses are not willing to let slip by in many cases and will require that individuals and companies that want to do business with them will carry the proper general liability coverage. The appearance that comes along with your business having the proper general liability coverage on hand at all time when going through the production of goods or as you provide your service presents a wonderful appearance to prospective business partners and to potential clients of readiness and responsibility.