As a contractor, your General Liability insurance works a little differently than it would for most businesses. Most of the work that you do is performed on the property of your clients, so you need to have coverages in place that will protect you for your work during and after the job is done.
General liability policies cover third-party bodily injury and property damage, products and completed operations, and personal and advertising injury. The following examples are potential claims scenarios that could be covered under these coverages:
- A client comes to your office for a meeting. One of your employees left a tool on the ground causing the client to trip and fall, resulting in a broken wrist. The client could file a claim against your business for bodily injury since you could be deemed a negligent party in the case.
- You install a sprinkler head in a warehouse that ends up being faulty. After you finish the project, the sprinkler head bursts causing water damage to the client’s property/inventory. Your products and completed operations coverage could pay on this claim.
- In your advertising, you accidentally use copyrighted or trademarked material, resulting in a lawsuit from the third-party company. Your personal and advertising injury coverage could help pay for this.
- You install an ANSUL System in a commercial kitchen. A fire starts in the kitchen and the ANSUL System you installed does not put out the fire, resulting in property damage. It is later determined that the system did not function properly, making you liable for the damaged property. Your products and completed operations coverage could pay this claim.
Like any other General Liability policy, third-party bodily injury and property damage could be covered for claims arising from an incident your premises (office, warehouse, company parking lot). Your products and completed operations coverage is what could cover you when performing work on someone else’s property. Standard General Liability coverage limits are as follows:
- Each Occurrence Limit - $1,000,000
- General Aggregate Limit - $2,000,000
- Products – Completed Operations Limit - $2,000,000
- Personal & Advertising Injury Limit - $1,000,000
- Damage to Premises Rented to You Limit - $100,000
- Medical Expense Limit - $10,000
The amounts of these coverages may vary, but the Occurrence limit is the maximum amount that the insurance company could pay out for any one claim. The General Aggregate amount is the maximum they could pay out for all claims combined during a policy term.
While many of the standard coverages are the same for each carrier, not every policy is made the same. Some carriers with fire suppression insurance programs will include things like Professional Liability, Blanket Additional Insured, Blanket Waiver of Subrogation, and Primary and Non-Contributory Wording automatically as part of the program. These are things that I will discuss further in future posts. If you’re not sure what additional coverages are available on your insurance program, be sure to ask your agent to present those options for you.