Hi, I’m Gordon Coyle, and today we’re going to dive into an essential topic on the minds of a lot of mid-market business owners – General Liability Insurance for middle-market businesses and how you determine coverage adequacy without blowing up your budget.
General Liability Insurance, often called GL is a crucial shield to protect your company from lawsuits and claims that may arise from third parties alleging bodily injury, property damage, or personal injury.
Having the right protection and the right limits to safeguard your company’s reputation and balance sheet and your future growth is critical.
But how do you know if your general liability insurance coverage is adequate?
Here are a few ideas I have on the subject.
- Assess your business activities and risks. It’s important to identify the potential risks your company and your industry faces. What is the norm in terms of limits purchased among your peer group? A manufacturer of consumable goods faces an increased risk of potential liability than say a retailer.
- Review your contractual and customer requirements. For many businesses that operate or engage customers under a contract, there may be specific limits those contracts will require. Unless you’re able to negotiate those requirements, those required limits may establish the floor on how much coverage you purchase.
- When you come up for renewal or you’re in the process of evaluating your coverage ask your insurance broker for price options for different limits of protection. This usually means in your umbrella or excess policies. Often business owners are conditioned to think: “Well I’ve always purchased $5M of coverage, I don’t see any need to change” – But what if purchasing more protection didn’t cost a heck of a lot more, wouldn’t it make sense to increase protection?
- Risks change over time and your insurance protection should as well. As an example, if your business has grown significantly over the past few years, but you haven’t increased your liability protection, that may be a problem. As sales increase, regardless of the industry vertical, your liability risks increase, and having the right limits of protection is needed.
- Consider the confines of general liability insurance and coverage exclusions. Unfortunately, many business owners think general liability insurance is all-encompassing, but it’s not. Yes, protection is fairly broad within its coverage grant, but GL does not cover all potential liability risks. For example, general liability does not cover claims arising from professional services – this is the domain of E&O or professional liability insurance. It also doesn’t cover claims arising from cyber risk – this is the domain of cyber insurance. And, general liability does not cover claims arising from shareholder disputes or claims from managing the company – these are the domain of D&O or Directors and Officers Liability Insurance. There are dozens of exclusions and conditions to be aware of in a general liability insurance policy.
- Nuclear Verdicts – You may have heard this term, referring to the huge jury verdicts being handed down in courts against businesses that are often paid by a company’s general liability and auto liability and umbrella policies. Nuclear Verdicts are a societal trend that business owners need to be aware of and consider when thinking through what liability limits to consider.
- Budget – As I mentioned earlier I’m keenly aware of the need to balance solid protection with affordability and your budget. And, right now we’re seeing prices for general liability rise which is putting a lot of pressure on CFOs and other decision-makers going through their renewal process. This is truly a balancing act between maintaining solid protection and affordability which every business owner needs to evaluate based on their own circumstances and issues.
The bottom line is that having sufficient coverage to protect you and your company from lawsuits can’t be left up to guesswork.
As I’ve mentioned above there are several considerations as well as tools to help think through the issues. I’m here to help you answer your questions, provide advice, and balance coverage adequacy and budget constraints.
Contact me and let’s chat about what’s on your mind when it comes to general liability insurance or business insurance in general.