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Comprehensive general liability coverage insures a business against accidents and injury that might happen on its premises, as well as exposures related to its products.
For example, suppose a visiting salesperson slips on a banana peel while taking a tour of your office and breaks her ankle. General liability covers her claim against you. But let's say your company is a window-sash manufacturer, with hundreds of thousands of its window sashes installed in people's homes and businesses. If something goes wrong with them, general liability covers any claims related to the damage that results.
The catch is that the damage cannot be due to poor workmanship. This points up one difficulty with general liability insurance: It tends to have a lot of exclusions. Make sure you understand exactly what your policy covers...and what it doesn't.
You may want to purchase additional liability policies to cover specific concerns. For example, many consultants purchase "errors and omissions liability," which protects them in case they are sued for damages resulting from a mistake in their work. A computer consultant who accidentally deletes a firm's customer list could be protected by this type of insurance, for example.
Companies with a board of directors may want to consider "directors and officers' liability" (D&O). This type of insurance protects top executives against personal financial responsibility due to actions taken by the company.
How much liability coverage do you need? Generally, experts say, $2 million to $3 million of liability insurance should be plenty. The good news is that liability insurance isn't priced on a dollar-for-dollar basis, so twice the coverage won't be twice the price.
The price you'll have to pay for comprehensive general liability insurance depends on the size of your business (measured either by square footage or by payroll) and the specific risks involved.
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