There’s an old saying that insurance doesn’t matter…until it does. General liability, GL for short, is fundamental to the business world. Most everyone knows that GL protects you from suits and claims brought against you by people injured on your jobsite, or home owners who allege damage caused by defects in the way a house was built. Beyond this things get a little fuzzy, which leads to some creative myth making. Here are the top 5 GL myths we hear all the time:
- #5 - I have Builders Risk. I don’t need GL, do I?
- Builders risk only covers your building materials at your jobsites while in the course of construction. It’s property coverage. With limited exceptions on some policies, there is no coverage for a passerby who trips and falls over a piece of scrap lumber that spilled onto the sidewalk and no coverage for construction defect claims later on.
- #4 - My subs have GL, so I don’t need it, or do I?
- Your subcontractors better have GL, or their claims become yours. Even if they have their own coverage, you can still be liable for some claims involving your subs. As the general contractor, you’re responsible for overall safety at the jobsite. Are you making sure your subs keep the sidewalks free of scrap lumber and other debris? Even if you police the jobsite every day, when was the last time you required your subs to provide a certificate of insurance? Are you named additional insured on their GL policies? Do they hold you harmless in your written contracts with them? All these things can create liability for you if neglected.
- #3 - I do some engineering and design work on the side. My GL covers that, right?
- Wrong. If you provide any professional services, you need professional liability insurance. GL doesn’t cover inaccurate advice, misrepresentation or claims involving bad faith.
- #2 - I only build one home a year. I’m too small to need GL, aren’t I?
- I’ll answer this question with a question – the last time you drove down any highway, how many bill boards advertising personal injury law firms did you see? We live in a highly litigious society. Any business, no matter how small, how new or how experienced is vulnerable to suits or claims by members of the public. Why take chances with your livelihood?
- AND THE #1 GL MYTH – I’ve been in business for 20 years and never had a claim. Why should I pay for GL now?
- I could answer this by simply saying read #2 again. The fact is you don’t have to purchase GL unless someone else requires it. Usually; some other business or governmental entity wants to see proof that you have GL. Why? To avoid having to deal with suits or claims that you’re responsible for. It’s called contingent liability. In reason #4, if you hire a sub who doesn’t have GL, you are responsible for his claims while working for you because you failed to make sure he had the necessary insurance. Not fair you say? Show me fair.
I hope this little countdown of GL myths helps to convince the previously unconvinced that having the proper GL coverage for your business is just as important as laying the proper foundation for a home. Anything you build on top of a shaky foundation is bound to fall sometime. For the riverboat gamblers out there nothing I say will be convincing. For the great majority of you, it might be time to take a look at your GL coverage needs. We can also handle your builders risk while we're at it. Call us at 1-866-454-2156 or visit us on the web at https://rwcinsuranceadvantage.com/products/general-liability/ for a free, no obligation quote.