You may wonder if you are legally required to carry general liability insurance in your quest to become an entrepreneur. In most states, there is no such requirement except for certain industries. States, however, do have requirements for certain types of commercial insurance like workers’ compensation and commercial auto insurance. Here is a look at the general liability insurance requirements you may encounter as an entrepreneur.
When do you need general liability insurance?
Although general liability insurance is usually not required by law, certain entities such as contractors are expected by clients and partners to carry liability coverage. General contractors that subcontract with independent builders usually require that each of the third-party workers has proper coverage. It is also necessary to get coverage when applying for a personal license or signing an office lease.
Is general liability insurance required by law?
In most states, there’s no requirement for general business liability except for certain industries like construction. In California, there are no caps on liability lawsuit settlements, which is why high-risk businesses in the state are wise to set high coverage limits on liability. Every business owner seeking insurance must customize their policies based on risks that can lead to lawsuits.
How much general liability insurance coverage do you need?
The amount of general liability insurance coverage you need depends on several factors, including your history of filing claims and the type of business you run. It is important to have a certain amount of coverage for financial protection, but you also need it to show your customers you care about their safety and well-being.
It’s up to you to choose liability limits that fit your business based on risks. If you think damages worth $1 million can occur at your establishment, that is the amount you will need for liability coverage limits.
When do small businesses need general liability insurance?
The more dangerous the work, the more the business needs add-on coverage beyond a general plan. At the same time, any business can get sued for a wide range of issues. Common lawsuits involve people getting injured on commercial property. Defamation suits can come as a surprise if someone is offended by something you say or write about them publicly. General liability coverage protects your business by paying for legal costs when you face litigation.
What do small businesses need to provide while applying for general liability insurance?
The main information you’ll need to provide on your insurance application includes revenue, the number of workers, claims history, and a few other items.
Do you have more questions related to doing business without general liability insurance? Contact our expert at RMS Insurance Brokerage, LLC. We are ready to help you with customized general liability insurance coverage for your business needs.