General liability (GL) insurance covers you and your business against “general” claims. A general claim is a claim arising out of a suffered bodily injury or damages to one’s movable or immovable property.
Why is General Liability Insurance Important?
If you run a business anywhere in the United States, a valid general liability insurance policy is a very good idea even though it may not be required by law.
Therefore, you should renew your GL insurance every year and shield your business from legal actions ensuing from your operations or services.
If you don’t have a valid policy at the time of the incident, one hefty claim could finish your small business off. General liability insurance gives the insured the protection they need to remain focused on the growth of their business.
What does General Liability Insurance Cover?
If a customer files a claim for bodily injuries suffered as a result of using some of your products, your general liability insurance provider may take care of that too if it includes some product liability insurance.
General liability insurance can also cover first aid and medical treatment costs, attorney fees court settlements, and awards ensuing from lawsuits in your company has been named as the defendant. GL insurance policies may also cover you against claims for property damages filed by your landlord.
In the state of NJ, most GL insurance providers also cover so-called “Advertising Injuries”. If you face charges for having published information that mars the public image of a third party, the plaintiff’s claim is also covered by your GL insurance policy.
What is not covered by my General Liability Insurance?
Unless otherwise provided, a standard general liability insurance policy doesn’t cover injuries suffered by an employee, damages that occurred as the result of road accidents, punitive damages, workmanship, intentional acts, or professional negligence.
The insurance company keeps its right to deny claims if its experts find out that the bodily injuries or the property damages have been caused by intentional or criminal acts.
Sexual harassment claims are not covered by your General Liability policy but you may be able to get covered for such circumstances with an Employment Practices Liability Insurance policy, or EPLI.
I would like to emphasize that general liability is different from professional liability. So, your policy does not cover any negligence claims against your company, or ones arising from employees’ injuries.
What factors determine the amount of GL insurance premiums?
How much your general liability policy is going to cost you per month depends on several factors:
- The type of your business
- Where in the United States your company is registered
- The number of employees you have
- The term of your general liability policy
How many general liability insurance plans are there in NJ?
If you have been looking for a GL insurance in NJ, you’ve probably noticed that most insurers offer two types of plans: Monthly and On-demand.
A standard plan means that your policy is active month-for-month, no matter if you are performing activities that necessitate valid general liability insurance.
As a rule, on-demand plans are more expensive, but they allow you to pause your GL policy when, for example, you take a hiatus. Naturally, you don’t owe the insurer any premiums for the period.
How to choose a good general liability insurance broker in NJ?
In the Sunshine State, you have a wide choice of general liability insurance providers. You should be looking for one that provides an unlimited number of copies of your Certificate of Insurance (COI) for free.
The insurance agreement that you sign with them should include a clause allowing you to add as many Additional Insureds to your company as you need free of charge.
As a rule, you should be able to change the limits of your policy as needed. However, only the biggest insurance companies allow the insured to get a Waiver of Subrogation at no extra cost.
A Waiver of Subrogation Explained
In your General Liability Insurance Agreement, you’ve probably come across the phrase a Waiver of Subrogation. If you are not an insurance agent or an attorney, you may not know what exactly it means.
Let me explain why when signing a contract, you should be keeping your eyes open for clauses that ask you to waive subrogation. If you sign such an agreement unheedful of the possible ramifications, your general liability insurance provider withhold any payments.
What does subrogation mean?
Subrogation occurs when a general liability insurer pays an insured individual or entity for a loss, damage, or bodily injury caused by a third party. The insurance provider is “subrogated” and makes a move to sue that responsible party on behalf of the insured.
Once the insurer has covered the insured’s losses or damages, it has the right to initiate legal actions against the third party that caused those losses, so as to make itself whole.
Some general liability insurance policies are worth quite a lot of money.
When covering the insured’s policy, the insurer thus suffers financial losses, which it can only recoup by suing the third party that caused the damage to the insured.
General liability insurers want to have their right to subrogation intact
Most GL insurance policies include clauses that require the insured not to take any actions which can in any way compromise the insurer’s right to subrogation.
Waiver of Subrogation is to be found in construction and lease contracts
The legal term “waiver of subrogation” appears mostly in construction and lease contracts. As a rule, NJ courts uphold any waiver of subrogation provisions.
This is a safeguard clause preventing the insurance company from stepping into the shoes of the insured and initiating legal proceedings against the party that caused the loss.
What if you are presented with a contract that has a waiver of subrogation provision?
If you hold a valid general liability policy and you have to sign a property lease contract that contains a waiver of subrogation clause, you should notify your insurance provider immediately.
Most of the biggest insurers in the Sunshine state are not afraid of entering into endorsements allowing the insured to sign agreements that include a waiver of subrogation.
If you do so, you can expect your insurance premium to go up. This increase reflects the fact that the insurer has taken a higher risk.
If you can afford it, you can always hire an attorney who specializes in waivers to negotiate with the legal insurance provider on your behalf.
Factors to keeping in mind when shopping for general liability insurance in NJ
Before asking a NJ-based insurer for a quote of their general liability plans, consider the following factors.
What type of business do you run?
If your business involves high-risk activities, you should honestly list them in the insurer’s questionnaire. If you make something (for example, toys), your general liability will protect you against claims challenging your product’s safety.
Some markets also require wholesalers to have higher general liability indemnity limits. One such example is the United States where attorneys charge a lot for their counselling, while at the same time courts tend to grant substantial awards.
List all risks
When discussing the general liability plans with an insurance adviser, you should inform him of any risks that your small business involves. The broker will then come up with a plan that provides sufficient and suitable coverage.
Read the insurance agreement thoroughly
Before signing your copy of the General Liability Insurance Agreement, you should read it through and through. If you can’t see the finest print, ask for a magnifying glass, or have the insurer’s representative read it out loud for you.
If you can’t understand any of the clauses, ask the insurance advisor to render them into simple words. You should not be ashamed of the fact that you do not speak legal English.
How to file a general liability claim with your insurer?
Let’s say an incident covered by your GL policy has occurred. The term within which you have to file your claim depends on the type of claim and the type of policy you hold. As a rule, general liability policies are occurrence-based policies.
This means that the claim is only covered if the incident occurred while the policy was active. If you have been named as the defendant in NJ, you usually have to respond within 20 days from receiving the claim.
Make sure to contact your general liability insurance provider within this period. Before you make this crucial phone call, make sure that you have the following information at hand:
- Your insurance agreement
- Your GL policy’s number
- Name of the insured person or legal entity, including EIN
- Where and when the covered incident occurred
- Your description of the incident should be as detailed as possible
- Any document that can support your claim – a receipt or parking ticket
Final Words on General Liability Policies in NJ
As a rule, BOP is a better deal than purchasing a GL policy alone, providing that the combined product includes the right cover for your business.