Running a small business is not the bed of roses as every day new challenges arise in the business landscape and you make mistakes often. But you can take definite action by purchasing commercial general insurance in order to tackle third-party liability claims against your business. Being a small business owner, you often overlook or underestimate the significance of a commercial insurance policy.
Commercial general liability insurance can secure your business operations against unexpected accident claim on your premises which cause legal cases against your business. The bodily injury or any property damage of someone in your premises can cause legal liability to your business. It is important to buy a comprehensive general liability insurance policy to cover the series of risk and liabilities attached to your business operations.
Here are some tips you can take note of in order to buy right commercial general liability insurance for your business:
1. Know the probable risk exposures: It is very important to know your business key risk areas before purchasing commercial general liability insurance policy. Risk exposures depend upon the size and type of industry of your business. For example, If you are a restaurant owner, you must take CGL policy as you have high foot traffic which ultimately increases the risk of third-party bodily injury. Similarly, if you operate in rented premises, there is a high chance of property damage so you should include damage to the rented premises extension in this policy.
2. Ascertain the budget for insurance: One should always decide on an optimum sum insured. Don’t underinsure your business just to lower down the premium amount. Your business turnover, multiple risk location, territory and jurisdiction etc are the crucial factors which should be considered while buying commercial general liability insurance coverage. One should consult an insurance expert in order to know the optimum sum insured and low premium amount.
3. The scope of Coverage: One should always assess the scope of coverage provided by the insurers as per the cost charged. For example, if you have multiple locations, it is important to cover all the location. A standard comprehensive general liability insurance coverage includes physical injury and property damage to the third party, personal and advertising injury and medical payments. You can get wider coverage by availing the extension covers by paying the extra premium and ensure complete protection for your business.
If your work premises contains lifts, you should opt lift extension cover. Other extensions such as pollution cover, AOG perils can also be included.
4. Don’t forget the list of exclusions: Always read the list of exclusions in the commercial general liability policy. In order to know the limitation of your insurance policy, you should be aware of the cases, when your policy will not act. Claims get rejected if occurred due to any reason stated in the list of exclusions. The main exclusions are known issues, prior acts, fraud, contractual guarantees, matters that fall under the purview of workman compensation or professional indemnity.
5. Know about the deductibles and coverage limit: Deductible is the amount which insured has to pay from his pockets if a claim arises. For example, If a claim of Rs. 5 lacs is been reported and the limit of a deductible is 1 lac. Initially, insured will pay Rs 1 lac from his pocket and the rest amount Rs 4 lacs will be paid by the insurance company. One should opt for a reasonable amount of deductible limit. If your deductible amount is high, then your commercial general liability insurance cost will be low.
6. AOA:AOY Limit: Anyone accident(AOA): Anyone Year(AOY) limit defines the ratio which determines the limit of indemnity payable to the insured at the time of claim. For example, 1:2 implies that the maximum liability you can claim is half of the sum insured amount for any claim. The ratio of AOA and AOY is to be selected from four options i.e. 1:1, 1:2, 1:3, 1:4. The premium will be charged on AOY limit. If you have opted 1:4 ratio, the premium will be low and 1:1 ratio assumes the highest premium amount. It is important to select the limit of AOA:AOY as per the probability of claim occurrence or risk exposures.
One needs to analyze the above-mentioned factors to buy a right CGL policy at the right price. But it is always suggested to take the help of an insurance expert to avail a cost-effective commercial insurance.
SecureNow, as an insurance expert can help you out in knowing the optimum sum insured and coverage. Click here to get quick commercial general liability quotes.