Why Is Liability Insurance Necessary For Contractors And Their Businesses?

Many people view insurance as protection against unknown risks. But that’s not exactly true. These policies protect against foreseeable risks. For example, it is foreseeable, although not inevitable, that a soldier will be shot in battle or a firefighter will get wet when responding to a structure fire.

General liability insurance (GL) policies protect your business against foreseeable risks. It is foreseeable, although not inevitable, that a person will slp on a floor or a customer will get food poisoning at a restaurant.

What Does It Cover?

Most GL policies, or business insurance policies, protect against bodily injury, personal injury, and property damage claims.

Most bodily injury claims involve slip-and-fall injuries. Older adults and younger children are especially at risk for falls. It’s usually amusing when a TV or movie character slips on a banana peel or a muddy walkway. But in real life, these falls often cause serious injury. Falls are the leading cause of emergency room visits and cost over $70 billion a year. In other words, the risk is significant and the cost is high.

Many freelancers and internet-based startups dismiss the need for GL insurance. Since they have no onsite customers, they assume they have no risk. But most of these policies also include personal injury coverage. “Personal injury” is a broad phrase that includes claims like defamation, libel, and slander. Such issues are common in social networking posts, online advertising, and other such mediums. A single lawsuit, even if it is borderline frivolous, usually costs tens of thousands of dollars. Once again, the risk is significant and the cost is high.

Yard care, home improvement contractors, and other such workers need property damage coverage in the worst way. People often cause unintentional damage when they are in the field. In addition to financial coverage for you, GL coverage gives your customers peace of mind. Many people flatly refuse to hire uninsured contractors, simply because the risk is so high.

Why Is It Necessary?

For the most part, business landlords have that same mentality. Uninsured tenants mean that their property is at risk. If the tenant unintentionally scratches a floor or causes other damage, the landlord must absorb the cost of repairs. Most businesses, including landlords, never take on additional costs if they can help it.

As your business grows, it is not just your money at stake. Many expanding enterprises seek out investors to fuel their growth. Experienced investors hardly ever sink money into uninsured companies. They are well aware that a single injury lawsuit can force even successful businesses to close. If their money would be subject to unnecessary risks, they will almost certainly invest elsewhere.

How Much Does It Cost?

As this article plainly demonstrates, almost all aspects of insurance involve risk. That includes premium payments. For the insurance company, risk is usually the likelihood of a claim and the amount of the deductible. Small business car insurance is cheaper in rural places than urban areas because there is less risk of a crash. Furthermore, the higher the deductible, the less potential exposure the insurance company has. Unless you are in a high-risk business, like commercial construction, or you insist on a very low deductible, GL premium payments are usually lower than you might expect.

For your business to grow and prosper, it needs solid business insurance. That starts with GL coverage.

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