General Liability Insurance
What Does General Liability Insurance Mean?
A general liability insurance policy is a type of insurance that protects insured commercial entities from various liability risks, excluding automobile and professional liability. It covers expenses such as:
- Medical costs incurred if someone is injured on company property.
- Property damages or injuries caused by the company’s owners or employees.
- Legal expenses, including the cost of the company’s legal defense, settlements, and awards in the event of a lawsuit.
- Damages, including non-monetary losses suffered by the injured party, compensatory damages, and punitive damages.
- Tenant-related liabilities, such as property damage if the company uses rented property.
- Claims arising from misleading or false advertisements, including slander, libel, and copyright infringement.
General liability insurance is also referred to as commercial general liability insurance.
Insuranceopedia Explains General Liability Insurance
Liability insurance protects the policyholder from risks associated with lawsuits and similar claims. These policies are typically designed to provide coverage for third-party claims. Consequently, the claim benefits are not paid to the policyholder but to the third party harmed by the policyholder’s actions.
It is important to note that the insurance contract does not explicitly mention this third party. When an injured third party files a claim, the insurance company has the authority to defend the policyholder.
Many insurers include coverage for public and product liability risks under a general liability policy. These risks may involve bodily injury or property damage caused directly or indirectly by the policyholder. Such policies also specify the maximum amount the insurer will pay for a liability claim.
