Posted on May 17, 2014

How Much Coverage Do I Need For My General Liability Policy?

Determining general liability coverage needs is not always an easy task. Because our society is becoming more litigious with business negligence lawsuits increasing, more companies are facing the possibility of claims and lawsuits for injuries and property damage. Courts in different states have different policies as it relates to awarding of damages with some states known for very large financial judgments.

More lawsuits with larger financial awards mean that it is increasingly difficult to ascertain how much insurance is truly enough. Many companies suggest a minimum insurance limit of $1 million in general liability coverage. Adding additional amounts over $1 million is further determined by the type of business you are in and your company?s size. The amount of the assets needing protection is also a factor in choosing the right amounts of insurance protection. Risk is also a concern when determining insurance amounts. Those companies in a high risk industry will definitely want to increase the amount of coverage to provide greater protection.

General liability insurance pays for claims of property damage caused by employees or bodily injuries to customers or visitors on site. The insurance will typically pay per occurrence up to the policy limits. So if a company was sued for $3 million and only had coverage for $2 million, the general liability coverage would pay up to the $2 million leaving a balance due of $1 million. This illustrates why having the right amount of coverage is vital to truly protecting a business.

In situations where additional policy amounts are needed, companies may also purchase umbrella liability policies that provide more insurance over and above the standard general liability coverage. So if a company was left with a $1 million balance after the general liability paid the $2 million award, the umbrella policy would pick up where the general liability ended and therefore pay the $1 million still due.

Our insurance agents and brokers can assist you in determining the right amount of coverage needed to fully protect your company from potential general liability claims. Contact us today to learn more.

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