General Liability Insurance 101

By:  Geof White

General Liability Insurance is typically the first step to insuring yourself and/or your company.  This type of coverage insures your business from personal injury to someone, or damage to property, either yours or the customer’s.  There are two things about General Liability Insurance that makes it practical for every company:

Why is General Liability Insurance necessary?  Consider one example.  Suppose you need to set up a ladder to clean some windows.  Next, you walk over to your bucket and upon returning, you find your ladder has blown over and smashed your customer’s award winning $750,000 Garden Gnome.  Do you really want to spend the rest of your life paying off that Gnome?  Or, would it be better to have your liability insurance pay for it (providing that you were not negligent)?

What You Need to Know About General Liability Policies

Property Coverage

Sometimes you will end up with something called a BOP (Business Owner’s Policy) in which the insurer will bundle the two coverage’s (liability & property).  Property Coverage insures damage and sometimes theft to computers, tools & equipment used for business.

Liability Coverage

Remember the example of the garden gnome?  If you or your equipment caused damage by accident, this is where Liability Insurance protects you (unless the accident was due to negligence – which we will address later).   We cannot always control what happens in a day. This coverage will protect your company from losses due to circumstances outside of your control.

Aggregate Limit & Per Occurrence

Your policy will have an “Aggregate” limit.  That is the maximum that can be paid out in certain time-frame.  It is almost always one year.  The most common aggregates are $1 or $2 million.  While your policy may have an aggregate of $2 million, your “per occurrence” may be limited to 1 million.  So, if you or your company is responsible for personal or property damage that draws $1.5 million in compensation…you guessed it!  The insurer will only pay $1 million.  However, Umbrella Policies can satisfy these situations.—we will discuss this in the next article.

Deductibles

Just like any other form of insurance, there will be a deductible with your policy.  A common deductible fee is $500 or $1,000.  Deductibles are the insurance company’s way of keeping people from calling in too many small claims.

Care, Custody & Control

Everyone that takes out a General Liability Policy needs to have this conversation with their agent.  What happens if you break a window while cleaning it?  It is under your care, custody & control.  Most policies do not cover Care, Custody & Control.  Of course, some policies do, but usually at an extra price.  This is a situation where “Errors & omissions” comes into play.  “Errors & Omissions” is a form of insurance that ALL insurance companies carry on themselves.  It protects the insurance company from covering something an agent promises to a client that they do not provide, or something the agent promised that wasn’t quite correct.  However, if your agent promises it, then it is binding to the insurer – as long as you have proof (e-mail, signature, fax, etc.).  In the case of care, custody and control, your agent may not know much about it.  If they say you are covered for care custody and control then get it in writing.   

Negligence

This is the “Dirty” word in General Liability Insurance policies.  General Liability does not cover negligence.  What is negligence?  “Negligence is the failure to use reasonable care, the doing of something that a reasonably prudent person would not do.”  Negligence is the “loophole” that your insurance provider is going to seek if you file a large claim (sorry for the cynicism, but this is America and we are talking about insurance companies, and insurance companies have the best lawyers around)!  So how do we as window cleaners avoid negligence?  I can only speak personally on this. Don’t do anything stupid!  There are correct methods to the work we perform every day.  Proper training of employees on procedures will help.  Knowing “the most effective methods” will help.  Leaving the ladder unattended on the side of a hill without levelers might be construed as negligence.

In My Professional Opinion

General Liability Insurance is the “best bang for the buck” when it comes to insurance for your company.  For as little as $500 - $1,000 per year, you can protect your company with up to $1 million per occurrence.

 Just like any other insurance policies – hopefully you will never need to use it, but you will be glad to have it in case you do!

(Prior to entering the window cleaning profession, Geof  gained  2½  years experience as an insurance agent with American Interstate Insurance Company, writing Worker’s Comp and General Liability policies for “higher risk” businesses)