When Does General Liability Insurance Payout?
General liability insurance for a business is designed to cover certain accidents that may occur on the property or as a result of everyday work activities.
Part of this insurance is not designed to compensate the business, but to compensate the victim who is injured or had their property damaged. Another part of this insurance, however, provides compensation to the business in case of a lawsuit regarding an accident.
Medical Payments
General liability insurance can cover medical bills for someone injured on the business’ property. This includes emergency medical services, medical treatment, hospital visits or stays, surgery, disability benefits and, in extreme cases, death benefits.
These expenses are compensated as they arise. As most injuries are ongoing or require ongoing treatment, this insurance will be paid as the costs pop up. A business owner may then file a claim on their general liability insurance policy to offer compensation to the victim. This is especially important, as offering this compensation immediately may help avoid a lawsuit in the future. This doesn’t mean that a lawsuit won’t occur, however.
Compensation also depends on the type of medical payment. Disability benefits may be paid on a consistent basis, such as if a victim is rendered permanently disable by an accident, while a death benefit would be a lump sum paid directly to the victim’s family.
Property Damage
Say someone’s expensive electronics are ruined as a result of negligence on your company’s behalf. Filing a claim with your general liability insurance policy can help replace or repair the broken electronics in a single lump sum payment.
Legal Payments
In the previous cases, compensation would typically go directly to the victim for their injuries or damages. Legal expense coverage under general liability, on the other hand, goes to the business owner. This coverage offers compensation for expenses related to a lawsuit, including court fees, settlement costs, defense expenses and more. These payments are also provided as they appear.
Exclusions and Limitations
Keep in mind that compensation will only be paid after a general liability claim is approved. This could take up to 30 days after the claim is filed, although this varies. Some states require insurers to approve or deny a claim within a certain amount of time, although insurers will occasionally wait until the maximum number of days to reply to a claim. As soon as a claim is approved, however, you may receive compensation soon after.
There are also certain circumstances in which you may be denied a general liability claim. Reasons a claim may be denied include:
- Criminal activities (committed by employees or the business owner)
- Medical attention was not sought (in case of injuries)
- The accident occurs due to professional negligence
- Claim exceeds the limit of the policy
- The accident is not covered
- Fraudulent claims
For example, if one of your employees causes bodily injury to someone else while committing a crime. This likely will not be covered under your general liability insurance policy. The same applies for accidents that occur due to professional negligence. General liability covers non-professional negligence, meaning other incidents of liability will not be covered. If your business or employees offer specialized services, you will need to purchase professional liability to cover accidents concerning professional negligence.
If a claim is denied, compensation will not be paid out. A denied insurance claim won’t necessarily cause your business to lose its coverage, but frequent fraudulent claims can result in a cancelled policy.
How Much is General Liability Insurance for a Small Business?
The cost of general liability insurance varies depending on a number of factors. This includes your location, the size of the business, coverage limits, industry and other factors. Having higher coverage limits for general liability generally costs more, but it also prevents gaps in your coverage. Double checking your coverage limits can help avoid denied claims due to a lack of coverage or low limits.
You can also expand your general liability insurance with an umbrella liability insurance policy. Umbrella liability insurance fills in the gaps left by your other liability insurance policies, including general liability. For example, if you reach the maximum amount for a single claim on your general liability policy, umbrella liability insurance will step in to cover the remaining cost. This insurance is a blanket or “umbrella” insurance that can apply to any of your other umbrella insurance policies, as well.