How General Liability Works
Under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren’t covered under general liability insurance policies because they’re considered to be punishment for intentional acts.
General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence. For example, if a company has a $1 million occurrence cap in its liability policy and it’s successfully sued for $1.5 million, the insurer would pay $1 million and the business would be responsible for paying $500,000.
What is an Occurrence Policy?
A covered claim must occur during the policy period but it does not matter when the claim is reported or made.
What does Bodily Injury mean in General Liability coverage?
Bodily injury means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting there from.
What does Advertising Injury mean in General Liability coverage?
Advertising injury means injury arising out of an offense committed during the policy period occurring in the course of the named insured’s advertising activities if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright title or slogan.
What does Personal Injury mean in General Liability coverage?
Personal Injury means false arrest, wrongful detention or false imprisonment, or malicious prosecution; the publication or utterance of a libel or slander or of any defamatory or disparaging material, or a publication or utterance in violation of an individual’s right of privacy; wrongful entry or eviction, or other invasion of the right of private occupancy; which occurs during the period.
What does Property Damage mean in General Liability coverage?
Physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting there from, or loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.