What is bodily injury liability? A small business owner’s guide

Liability claims are common during business but could lead to substantial financial consequences. For example, let’s say you were adjusting a shelf bracket when a customer asks a question. As you turn your attention to them, a second customer trips on your tool bag, breaks their wrist in the fall, and files a bodily injury lawsuit for medical costs associated with their injury.

How would you pay for legal fees, medical expenses, or court awards? That’s where general liability insurance comes in.

What is general liability insurance?

You may have heard of liability and personal injury protection (PIP) as part of auto insurance coverage. However, a car insurance company’s bodily injury coverage is not the same as the coverage you get with a small business policy.

General liability insurance is one of the most important coverages you can have when it comes to small business insurance. You can buy coverage on its own or as part of a Business Owner’s Policy.

The core purpose of general liability coverage is to protect your business from bodily injury or property damage claims. According to the Small Business Administration, the risk is more real than you might think—between 36% and 53% of businesses are sued each year.

But small business general liability insurance can help. If someone sues you for bodily injury, your policy can pay for:

• Medical payments coverage
• Medical bills for ongoing treatment
• Loss of income
• Funeral expenses
• Legal defense costs
• Claim damages and court settlements

While there is no state minimum for this type of coverage, a minimum amount of liability coverage might be an insurance requirement of your commercial lease agreement if you lease space for your business.

So, why is it so crucial? It comes down to what liability insurance covers—property damage, bodily injury, advertising injury, and more.

Scenarios that general liability insurance covers

The insurance coverage a policy offers can vary among insurance companies. Insurers can tailor coverage to the specific needs of your business—you might increase your amount of coverage based on a business contract or negotiate lower premiums in exchange for installing safety equipment and taking proper precautions.

However, general liability insurance coverage typically includes the following scenarios (remember, these are just examples):

• Bodily injury liability: If a customer trips and falls while shopping in your store.
• Property damage liability coverage: If you accidentally damage a customer’s valuable belongings while working in their home as a contractor.
• Advertising injury: If your marketing department uses a stolen idea to launch a new advertising campaign.
• Copyright infringement: If a musician or studio files a lawsuit against your company for using their copyrighted music in a commercial.
• Reputational harm: If a competitor sues you for slander due to your aggressive new marketing campaign.

While these are examples of how insurance policies can protect your company, it’s important to note that general liability limits coverage to third-party claims (claims from outside your business).

General liability won’t protect you if the injured person is an employee—that’s where workers’ compensation insurance comes in.

What happens if someone sues my business for bodily injury?

Good question. How much bodily injury liability coverage you have and when your insurance kicks in depends on the specifics of your policy.

However, for businesses that welcome customers onto their premises or provide services on a customer’s property, lawsuits are a cost of doing business. It’s best to prepare now for what might happen if someone sues your business.

The first thing you should do when you receive notice of a lawsuit is to contact an attorney for guidance. An experienced lawyer can review the suit papers to determine your best course of action.

Do not talk to or communicate with the person filing the lawsuit, even if that person is a regular customer, neighbor, family member, or friend.

Next, notify your insurance provider. General liability policies usually cover bodily injury liability claims. If the complaint falls under what your policy covers, common coverage pays for attorney fees, court costs, and any settlement or court award you’re found to be liable for.

However, coverage limits exist. It’s possible to face a lawsuit that exceeds the maximum amount of your general liability coverage, and you may want to consider a commercial umbrella policy to extend your policy limits.

(Keep in mind that being sued is a serious legal matter, and this article is not a substitute for legal counsel.)

Who needs bodily injury liability insurance?

Bodily injury liability is a crucial part of a general liability insurance policy. While it isn’t required by law, some industries can direct your business to have coverage.

For example, basic insurance requirements for contractors include a minimum coverage amount of $1 million for a combined single limit for both bodily injury and property damage, according to the International Risk Management Institute (IRMI).

You should consider buying bodily injury insurance with a general liability policy if you:

• Have an office, building, store, or other location that’s open to the public, clients, or vendors
• Handle or provide services near or on client property
• Create flyers, brochures, online ads, commercials, or other marketing advertisements for your business
• Use social media personally or professionally

As you can see, nearly every business owner could benefit from bodily injury insurance. It’s included in general liability policies—general liability has both bodily injury and property damage liability coverage. And it’s a smart move for most companies because it offers blanket protection against common claims you could encounter as a small business owner.

At Huckleberry, we’ve got your back. Get a general liability insurance quote to protect your small business. It’s all online—no need to “hold for the next customer service representative” or fill out a stack of insurance forms—it only takes about 5 minutes.