General Liability Insurance is a foundational part of a business’s risk management strategy. Most importantly, this type of coverage typically offers protection against a range of potential lawsuits that companies might face. As long as the lawsuit aligns with the policy’s terms, coverage typically applies to a wide range of claims, from minor legal disputes to major court cases and complex class-action suits.
To make sure they’re well covered, most businesses should look for general liability policies that have high per-occurrence (per claim) and aggregate limits (total paid in a policy period), along with robust coverage.
the three core categories of coverage
Most general liability insurance policies cover lawsuits resulting from claims that fall into three of the following main categories:
- Bodily Injury (e.g., Slip-and-Fall Accidents)
Bodily Injury, or commonly known as Slip-and-Fall, encompasses a wide range of common accidents that people might suffer, possibly including incidents where someone slips, trips, or falls and injures themselves. If a customer or vendor suffers such an accident on company property and is injured, they might sue, and a general liability policy may cover that litigation. It’s important to note that injuries sustained by employees typically fall under Workers’ Compensation insurance, not general liability.
- Property Damage
This type of coverage is vital for any business that operates off-site, hosts visitors, or interacts with client-owned assets. This type of coverage may help pay for repairs and legal expenses. If a contractor damages a customer’s property, these incidents can lead to costly claims, especially if the damage is to property that is high-value or irreplaceable.
- Personal & Advertising Injury
With the growth of digital content and social media marketing, these types of claims are becoming more common and more complex. This category of coverage includes claims related to:
-
- Libel (written defamation) – occurs when a party makes written or published defamatory remarks about another party. If the statements are unsubstantiated and cause harm, the person or organization making them might be sued for damages. Competitors sometimes file libel suits against other companies over false claims made in advertising campaigns, and paying the legal defense costs for such a case can be expensive. Thus, it’s good that most general liability policies offer at least some coverage for these types of lawsuits.
- Slander (spoken defamation) – similar to libel, except the defamation is spoken rather than written or published. Business owners might think their organization is at little risk of facing such a case. Still, a single unfounded comment about a competitor that a salesperson or customer makes could leave a business susceptible to this type of legal action.
- False Advertising – These types of lawsuits are usually based on claims made in marketing campaigns, and these types of cases can be costly. Even if a single claim itself is relatively minimal, good marketing campaigns reach lots of people, and many of those people could sue. They may even band together in a class action suit, which is one type of case that general liability policies typically include in their protections.
Evolving risks and new types of claims
While traditional risks are still relevant, new legal exposures are emerging, particularly in the digital and data-driven age. The storage of customer data, as well as the potential for class action lawsuits, leaves businesses more vulnerable to a broader and more complex set of liability claims.
As companies increasingly adopt AI-driven tools and products, questions around liability are becoming more frequent and complicated. In some cases, general liability policies may respond to AI-related incidents if they result in bodily injury or property damage. For example, if a smart car using an AI system causes physical harm or damages property, coverage may apply, provided AI isn’t explicitly excluded from the policy. As AI-related claims continue to rise, companies should work closely with their advisors to review existing coverage for exclusions or insurance gaps.
Here are four emerging types of claims reshaping general liability in today’s digital landscape.
- Biometric Data Privacy
Many businesses now use fingerprint scanners, facial recognition, or other biometric tools for security or time tracking. If that data is mishandled, legal action can arise under state privacy laws like Illinois’ BIPA (Biometric Information Privacy Act).
- Ransomware & Cyber Incidents
Cyberattacks can disrupt operations and damage reputations. While cyber liability insurance handles much of this risk, general liability policies may respond if reputational damage or false advertising claims result from an incident.
- Mass Tort Litigation
Examples like the opioid crisis have demonstrated how specific industries can face sweeping legal action. These cases involve multiple plaintiffs and can result in staggering legal costs.
- Inflation and Legal Pressures
Rising legal fees, court costs, and settlement amounts are driving up claim values, leading to higher premiums and stricter underwriting standards. For example, nuclear verdicts (civil suits with $10 million or more awarded) are gaining traction, creating a trickle-down to increased premiums and stricter insurance limits.
Why reviewing your policy matters
Just because a policy will cover a particular type of lawsuit doesn’t automatically mean that the policy will pay all expenses associated with a legal case. Like other types of insurance, general liability policies typically come with limits and often won’t pay for costs beyond their limits. Limits may be per-occurrence, which usually places a maximum on how much they’ll pay for a single claim, and aggregate, which may limit how much they’ll pay over the entire duration of their effective period.
More importantly, general liability coverage must evolve with your business. Today’s courts are interpreting new forms of advertising injury and digital reputational harm, and data privacy claims are gaining traction. If your policy hasn’t been updated in recent years, it may leave you exposed to modern risks.
Find General Liability Insurance for Your Business
For help with finding general liability insurance that’ll protect your business from a range of potential lawsuits, contact World Insurance Associates. Our advisors can obtain quotes for policies from multiple insurance providers and help you determine which insurance policy offers the most robust protection.
This update is not intended to be exhaustive, nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice. All rights reserved.