How General Liability Insurance Works for Tech Businesses
Commercial General Liability Insurance can address three basic business liabilities:
- Third-party bodily injury.
- Third-party property damage.
- Advertising injury (such as slander, libel, or copyright infringement).
This means that if a customer, client, or visitor alleges that your tech business was responsible for one (or more) of these things, your General Liability policy may provide coverage for the claim. And if one of these claims escalates into a lawsuit, your policy may even pay for the legal expenses, such as attorney fees and settlements or judgments. (See our blog post on claims vs. suits to learn the difference between these terms once and for all.)
The bottom line: in the event of a covered incident, your General Liability Insurance can chip in funds so you don’t have to empty the bank account to make things right. Now that you know the coverage basics, let’s take a closer look at each of those liabilities.
Bodily Injury Claims
Though they occur rarely in the IT field, bodily injury lawsuits can be one of the mostly costly types of liability claims a business can face. If a third party is injured on your premises or blames their injury on your business, the resulting damages can be staggering. Besides the cost of the actual lawsuit, consider the medical bills and lost wages that you may be asked to cover. Luckily, General Liability Insurance can provide funds for these cases, helping you to defend yourself in court or cover the third party’s immediate medical costs.
For example, say you operate out of an office and a client stops over to discuss a project with you. It’s winter and you haven’t taken care of a slick patch of ice on the sidewalk in front of your office door (you should always have a little rock salt handy, but that’s beside the point). When the client arrives, he slips on the ice, falls, and breaks his arm. Your policy may be able to cover his hospital bill and related medical costs, preventing you from paying out of pocket. If he sues, your policy may cover your legal costs and help you hire an attorney to defend yourself.
In the extreme (and unlikely) case that a third party’s injury or illness results in death – say your client slips and seriously injures his head – your policy may provide funds for medical costs, funeral expenses, and court-awarded compensation, depending on your policy inclusions and limits.
Note, however, that General Liability coverage applies only to third parties. If your employees are injured on the job, you need Workers’ Compensation Insurance to cover their expenses.
Property Damage Claims
If you ever work with someone else's equipment or operate in clients’ offices, this coverage is essential. Basically, if a third party alleges you damaged their property, your General Liability policy may help pay to repair or replace their items. If the claim leads to a lawsuit, your policy may cover the subsequent legal expenses.
For example, say you’re carrying a client’s computer, and you accidentally drop it into a koi pond (because your client has a super hip office with an inconveniently located indoor koi pond). Your General Liability policy may provide the funds to replace the computer (and the koi) if your client makes a claim.
Advertising Injury Claims
Advertising comes with a few risks, but General Liability can help address them. For example, if a competitor accuses you of slander or libel (e.g., you tweet something offensive about them, and it hurt their business), your policy may provide funds for your legal defense.
A likelier risk, though, is copyright or brand infringement. A much larger business may sue you if it thinks you’re treading on its brand. For an example in a different industry, see our blog post about 7-Eleven’s copyright infringement lawsuit against a mom-and-pop store.
Lastly, it’s worth noting that General Liability can provide coverage for both legitimate lawsuits and those without merit. If someone sues you over a General Liability claim but has no evidence, your policy can still help pay for legal defense fees. Even a frivolous lawsuit can cost a business thousands of dollars to resolve, so it makes sense to have liability insurance just in case.