General liability insurance covers damage to the property of or bodily injury to a party other than the Insured. While general liability insurance will cover a person employed or hired by the Insured, it will not cover any injury suffered by the Insured.
Assume an Insured is engaged by an unrelated party to take raw material and turn it into a finished product. If a fire occurs while the raw material is the Care, Custody and Control (CCC) of the Insured, the Insured’s general liability policy, if written correctly, will cover the damage to the raw materials.
This is a very interesting scenario. The raw material is less valuable in its raw condition than the finished product. However, depending on the contract between the Insured and the unrelated party, the Insured may be liable for the value of the finished product, even though it was only the raw material that was damaged by the fire. The Insured better have the right insurance.
General liability insurance is always about the other party’s injuries not the Insured’s. It can range from false imprisonment to advertising injury to Employee Benefit Liability (EBL). EBL could arise where a client has a 90-day health insurance enrollment period and fails to enroll a new employee by the 90th day. If that employee were to become gravely ill, the employer may end up paying the employee’s medical costs out of pocket, unless the client has a property written general liability insurance policy.
Advertising injury is also included in most general liability policies to defend the Insured against a claim, as well as pay any award granted by a court or other settlement. The average amount of coverage for advertising injury is $1 million.
Another common coverage offered is personal injury. Personal injury protection includes claims for false imprisonment. While this may seem unusual, many large retailers have private security to guard against theft. If the store’s private security wrongly detains a person who has been accused of theft, the store could be liable for false imprisonment. Even police departments apprehend and hold the wrong person. A general liability policy would cover this under personal injury as opposed to bodily injury.
Lastly, some insurance policies include coverage of $5,000 to $10,000 for medical payments to settle minor injuries to people hurt on another’s premises.
Things that are excluded in the standard general liability insurance policy may include communicable disease, breach of contract, and loss of key contract. Most standard carriers will not spend the money to underwrite such risks. However, there are other ways to insure these risks, one being a Captive Insurance Company (captive).
A captive is an insurance company formed by a business to insure the risks of the business and its affiliates. A captive can help bridge the gaps between the commercial insurance market and the needs of your company’s risks that are unobtainable.
To learn more about general liability or captive insurance, contact RMC Group today to speak with a licensed insurance professional – 239-298-8210 or [email protected].
