Commercial General Liability Insurance

What is General Liability?

Why do you need it?

• Legal Defense and Financial Protection
  In today's litigious society, any business can become the target of legal actions, regardless of its size or industry. Legal fees can escalate quickly, even for baseless claims. General Liability insurance provides vital financial protection by covering these costs, ensuring that a lawsuit doesn't jeopardize your company's financial stability. This includes attorney fees, court costs, and any settlements or judgments. Without this coverage, your business would have to bear these expenses out of pocket, which could be financially crippling.
• Client Contracts and Trust
  Establishing trust with clients is paramount. Many clients require their technology partners to have General Liability insurance as a condition of their contracts. This stipulation is a testament to your company's reliability and commitment to professional standards. By maintaining General Liability insurance, you demonstrate to current and prospective clients that your business is responsible and prepared for unforeseen events, thereby enhancing your credibility and fostering trust.
• Commercial Lease Agreements
  Similar to client contracts, landlords often require tenants to carry General Liability insurance as part of commercial lease agreements. This requirement protects the property owner from potential liabilities that could arise from your company's operations within the leased space. By holding this insurance, you comply with lease terms, safeguard your relationship with the landlord, and ensure that your business has a secure location to operate.
• Operational Risks
  Technology companies face unique operational risks that can lead to third-party claims. For instance, if a visitor to your office is injured, or if your employee accidentally damages a client's property during a service call, your company could be held liable. General Liability insurance covers these risks, providing protection against claims of bodily injury, property damage, and more.
• Advertising and Reputational Harm
  Advertising and online presence are natural for technology companies. However, these activities can inadvertently lead to claims of defamation, libel, or copyright infringement. General Liability insurance typically includes coverage for personal and advertising injury, protecting your company from claims resulting from your advertising efforts or statements.
• Business Continuity
  In the aftermath of a claim or lawsuit, your business operations could be disrupted, leading to lost income and increased expenses. General Liability insurance helps ensure business continuity by covering the costs associated with claims, allowing your business to keep running smoothly despite legal challenges.

Common coverage parts

• Bodily Injury
  This coverage is essential for any company that has a physical presence or interacts with clients and the public. It protects against the costs associated with bodily harm caused to a third party due to the company’s operations or premises. For example, if a visitor trips over equipment at your office and gets injured, this part of the policy would cover medical bills and legal fees if the injured party sues for damages.
• Property Damage
  This portion covers damages your business causes to someone else's property. In the tech world, this could occur if an employee accidentally damages client property while installing hardware or during a demo at a client's site. The coverage helps pay for repair or replacement costs and legal expenses if the property owner files a claim.
• Personal Injury
  In the context of General Liability insurance, personal injury encompasses non-physical damages such as slander, libel, false arrest, wrongful eviction, and invasion of privacy. Technology companies, especially those active in online marketing and communication, can inadvertently face these risks. This coverage part helps protect your business from the legal costs and damages of such claims.
• Advertising Injury
  Given the significant online presence of tech companies, advertising injury coverage is crucial. This covers risks related to copyright infringement, trademark infringement, and misappropriation of advertising ideas. If your company's marketing materials inadvertently infringe on another business's rights, this coverage can address the legal defense costs and any damages awarded.
• Medical Payments
  This coverage provides for the medical expenses of a third party injured on your business premises or as a result of your business operations, regardless of fault. It’s designed to facilitate a quick settlement for minor injuries without legal action. For technology companies, this could cover scenarios like a delivery person slipping on wet floors at your office or a client getting a minor electric shock from malfunctioning equipment during a visit.
• Tenant's Legal Liability
  If your technology company leases its office space or operates out of rented premises, this coverage is particularly important. It protects your business if it’s found liable for damages caused to the rented property, such as fire, water damage, or structural harm resulting from your company's activities or negligence.

Common exclusions

• Intentional Acts Exclusion
  General Liability policies do not cover damages or injuries resulting from intentional wrongdoing or criminal acts by the insured. For technology companies, this means that deliberate violations of laws or regulations will not be covered.
• Professional Services Exclusion
  Standard General Liability policies exclude losses resulting from professional services, highlighting the importance of endorsements like Professional Liability. This is particularly relevant for tech companies whose primary business involves specialized services or advice.
• Pollution Exclusion
  For tech companies involved in manufacturing or handling hazardous materials, it's important to note that standard policies typically exclude pollution-related claims. If relevant, companies should consider additional coverage options.
• Electronic Data Exclusion
  General Liability policies often exclude losses related to electronic data. Since tech companies heavily depend on digital information, this exclusion can be significant, underscoring the importance of cyber liability endorsements.

Limits and deductibles

• Per Occurrence Limit
  This is the maximum amount the insurer will pay for a single claim or event. For technology companies, this might range from $1 million to $2 million. This limit is crucial because it defines the financial protection for each incident that might occur. For example, if a lawsuit claims damages due to a product malfunction, the per occurrence limit is the maximum payout for that specific lawsuit.
• Aggregate Limit
  This is the total amount the insurer will pay for multiple claims over the policy period, usually one year. For many policies, this might be double the per occurrence limit. The aggregate limit ensures that a policy can cover multiple incidents, which is particularly important for technology companies facing various risks throughout the year.
• Umbrella and Excess Liability
  To increase coverage beyond the standard limits, companies might opt for umbrella or excess liability insurance. These policies provide additional coverage after the underlying policy limits are exhausted. For a tech company with high exposure, these options can extend financial protection significantly.

• Standard Deductibles
  For General Liability insurance, deductibles can vary widely based on the insurer and the risk profile of the company. They might range from $500 to $1,000 per claim, but higher deductibles can also be chosen. Opting for a higher deductible can lower the premium cost but means more out-of-pocket expenses when a claim occurs.
• Impact on Premiums
  Generally, the higher the deductible, the lower the premium, since the policyholder is assuming more risk. Technology companies must balance the desire for lower premiums with the need for manageable out-of-pocket expenses. A high deductible could strain financial resources if claims are frequent or unexpected.

Typical cost

• Business Size and Scope
  The size of your company, including the number of employees, the scale of operations, and annual revenue, significantly impacts insurance costs. Larger companies typically face higher risks due to more extensive operations and higher client exposure, leading to higher premiums.
• Industry Risks
  Technology companies operate in a sector with diverse risks, including data breaches, software failures, and intellectual property issues. Companies in high-risk areas, such as cybersecurity or hardware manufacturing, may see higher premiums due to the increased likelihood of claims.
• Location
  The geographic location of your business can affect insurance costs. Companies in areas with a high cost of living, higher rates of litigation, or greater susceptibility to natural disasters might face higher premiums.
• Claims History
  A history of claims can indicate a higher risk to insurers, leading to increased premium costs. Companies with few or no claims can often benefit from lower rates due to perceived lower risk levels.
• Coverage Limits and Deductibles
  As previously mentioned, the chosen limits and deductibles of your policy will influence its cost. Higher coverage limits and lower deductibles typically result in higher premiums, but they provide greater protection.
• Type of Technology Services Provided
  The specific services or products your company offers can significantly impact insurance costs. For example, companies developing physical tech products may face different risks compared to those offering software solutions.

Useful statistics

• Customer Requirements
  Over 60% of contract agreements in technology and consulting sectors require companies to have General Liability insurance. This requirement reflects the standard industry practice and the importance of maintaining adequate coverage for business partnerships and contractual obligations.
• Industry Claim Frequency
  According to industry data, about 40% of small businesses are likely to experience a property or general liability claim in the next ten years. This statistic underscores the commonality of risks that businesses face, emphasizing the importance of having adequate coverage.
• Average Cost of Claims
  The average cost of a slip and fall claim, one of the most common General Liability claims, is around $20,000. Legal defense fees can significantly increase this cost, highlighting the financial risks that can be mitigated through proper insurance coverage.
• Reputational Harm
  For technology companies, the cost of a reputational harm claim, such as defamation, libel, or slander, can average between $50,000 and $75,000. These figures illustrate the potential financial impact of personal and advertising injury claims on a business.
• Policy Utilization Rates
  Studies indicate that up to 35% of businesses with General Liability insurance file a claim within a ten-year period. This rate demonstrates the practical utilization of General Liability policies and the likelihood that a company will need to rely on its coverage at some point.

Why have it with Koop?

• Industry Expertise
  Koop understands the unique risks and challenges faced by technology companies. This specialized focus means they can offer policies tailored to the specific needs of tech businesses, such as coverage for software development risks, data breaches, and intellectual property issues.
• Risk Management Automation
  Koop offers an advanced Enterprise Risk Management (ERM) automation tool that allows companies to effectively manage contractual requirements, reduce risk through risk controls, and unlock insurance benefits such as insurance discounts and simple renewals. Additionally, the tool saves a lot of time on insurance and compliance tasks.
• Customized Solutions
  Unlike one-size-fits-all policies, Koop provides customizable insurance solutions that can be adapted to fit the unique operational needs of your tech company. Whether you're a startup or an established enterprise, Koop can tailor a policy to match your specific risk profile and business model.

How to get started?

1. Click "Sign Up" to instantly create an account on our platform
2. Go in, select General Liability, and fill out an application
3. Get a quote, carefully review it, and hit "Accept"