Small businesses often will understate the importance of purchasing general liability insurance but will often overlook the importance of general liability insurance limits. All too often, small business owners buy policies based solely on policy premium. When it comes to saving money on your insurance, one of the first things many people sacrifice is coverage limits.
Buying small business general liability insurance requires you to understand everything. But focus on the limits!
What are General Liability Insurance Limits
Having every coverage type on your policy is excellent. What if the limits are too low? For your business, it all comes down to risk exposure. How much exposure are you willing to accept? It goes beyond the types of coverage you buy. The dollar amount covered matters!
The limit on your policy is going to dictate how much your insurance provider can pay out to you in the event of a claim. Let us look at an example where someone sues you after slipping at your place of business.
You may be liable for the damages they have sustained, and those damages could be upward of $100,000 or more. The general liability insurance limits on your policy dictate how much the insurer will pay. If you are liable for $100,000 in damages, but your policy only has a limit of $20,000, you only get the $20,000 and you would be personally liable for the rest. When selecting insurance coverages, you must focus in on the general liability insurance limits just as much as the coverage types!
Types of Limits on the Policy
Pay close attention to the aggregate and per occurrence language on the policy as well. There may be two limits, one for each type listed here. The aggregate limit is the coverage amount. An insurance provider will not pay more than that limit. You could have ten claims against you, each worth $10,000. If your aggregate limit is $100,000, you get the full pay because they all add up to that limit. If the aggregate were $50,000, then payouts would stop once claims damages totaled that amount.
Per occurrence limits include the payout per claim. If you have ten claims at $10,000 each, but you have a per occurrence limit of $5,000, only that amount gets coverage per claim. For those ten claims, $5,000 is the payout in damages from the insurance provider. The per occurrence is the damage limit from one instance of a claim or event to the next.
General liability insurance is essential for small businesses. We often get too focused in on our coverage types as well as the deductibles and the premium. Missing coverage limits is natural to do. Even if you focus on them, understanding is a whole different game.
Your coverage limits are valuable! They state the pay you receive if covered claims get a filing. Shop with us at Brashears Insurance today! We can help you understand your coverages and limits. Our goal is to get you a comprehensive policy to protect your business!