Liability insurance is a form of specialty insurance that covers the insured’s legal responsibilities in a covered event or incident. Liability insurance is most commonly found in auto insurance policies, but you can obtain it for anything from business insurance coverage to homeowners insurance. In business, two common forms are public liability and general liability.
General Liability Insurance
General liability insurance, often shortened to GLI, is a form of all-encompassing business insurance coverage. It covers your legal liability in incidents of bodily injury, personal injury (including intellectual property infringement), and product liability or loss.
Advantages of General Liability
GLI is like a “catch-all” insurance policy for businesses--it covers the essentials, and protects a company’s assets in case of a catastrophic event.
Drawbacks of General Liability
Premiums are extensive when compared to median public liability premiums, thus making it difficult for small- and medium-sized businesses to afford general liability insurance. GLI also does not include worker’s compensation or professional liability coverage.
Public Liability Insurance
Public liability insurance--or PLI--protects a business’s interests when a customer or other third party suffers an injury or other loss or damage while on the business’s premises. It is the quintessential form of liability insurance for any business that opens its doors to the general public, particularly retailers. PLI is comparable to “minimum coverage” auto liability insurance.
Advantages of Public Liability
PLI typically offers the most economical premiums available, and allows you to operate without worrying whether your business will go bankrupt covering an injury or damage claim filed by a customer injured in your store.
Drawbacks of Public Liability
PLI only covers your liability against public claims; you are still open to claims from employees, vendors, investors, and even yourself, unless you purchase additional forms of insurance coverage. You may also be responsible for any expenses exceeding your policy limits.
- “Professional Liability & Risk Management;” Bruce Bennett; 1998.
- “Commercial General Liability;” Donald Malecki, Arthur Flitner; 2005.
Carrie Ferland is a practicing civil litigation defense attorney in the Philadelphia Area. As an author, her work has been featured in various legal publications for over 10 years. Ferland is a 2000 graduate of Pennsylvania State University and completed her Juris Doctorate and Master of Business Administration with the Dickinson School of Law. She is currently pursuing a Doctor of Philosophy in English.