Revisiting General Liability Insurance

April 26, 2013 – Orange County, California

As most business people and owners know, one of the first things that you do when you start your business is to acquire General Liability Insurance. The main purpose of a business owner having Orange County General Liability Insurance Coverage is to protect the business from a wide variety of liability exposures that could potentially harm the business’ financial survival. A small sample of some of the exposures may include liability arising from accidents resulting from the insured’s premises or operations, a product that was by sold the insured, operations completed by the insured, and even contractual liability.

In talking with current and potential clients, the most common thing I hear from them is “Won’t my General Liability Insurance pretty much cover everything my business is doing?” Not really! Each business has unique needs, and it should do everything to be sure that the General Liability Insurance that they acquire will properly cover their particular business needs. Let me give you a few examples. A few months back, I was quoting a local roofing company. We had secured a very competitive quote that would address the type of roofing the business was performing and also included several blanket endorsements, and because of his record of having no losses, we were able to secure additional credits to reduce the premium. All in all, we presented what we thought to be a very competitive quote. Now, we have been insuring roofers for a very long time and know this market very well, and usually our quotes are very well crafted, and we rarely come in at the highest rate. Well, we presented the quote and we were told we were in the neighborhood of about seventy percent higher than another quote they had received.

We realize that we aren’t always successful on every quote, but we have never been this high on a quote since our agency was founded. I asked to see the quote, and the client was kind enough to forward the quote to me for review. In reviewing the quote, I noticed that the competing quote had the wrong contractor liability code; it wasn’t even a roofing code. I relayed this information to the client, and, much to my surprise, they responded that was okay because they were very confident that a claim would never happen, and that they had a certificate of insurance to show clients as proof of insurance even though it didn’t cover their roofing operations. Their only concern was to obtain the lowest quote possible, regardless of coverage. After hearing that and advising them of their lack of proper coverage, there was not much more I could say to persuade them to change their mind.

Another instance was when a distributing company asked us to provide them with a quote for their liability policy that was expiring soon. In discussing with them about their needed coverages, we sent them a product liability application to complete and return. Their first response was they didn’t need product liability coverage because they were only distributing, and since they didn’t make the product, it was an unnecessary coverage. We explained to them that even though they didn’t actually manufacture the product, in fact, they do incur liability for those products; and in this case, since the products they were distributing were made outside the United States, they would be the first line of defense in the event there was a lawsuit brought against the product in the United States. Once we explained the risks associated with not acquiring Product Liability Insurance, they sent in their completed application, and we provided the proper coverage to protect their company in the event of a claim or lawsuit.

As you can see, there are many things to consider when acquiring General Liability Insurance. The best way to make sure your business has the proper insurance coverage is to sit down with an experienced commercial insurance agent and go over every aspect of your business, what it does, produces, sells, or services and find the right coverages to properly protect it sufficiently. We, at PJO Insurance Brokerage, would appreciate the opportunity to sit down with you and find the proper coverage for your particular business.