What to tell your Clients about General Liability Insurance Coverage

December 8, 2022


The Normandy Team
What to tell your Clients about General Liability Insurance Coverage

General liability insurance coverage is not just a coverage a business owner should consider, but it is something they need to have on their side. Did you know that approximately 53% of small businesses suffer at least one lawsuit? These types of lawsuits, regardless of the reason for the suit, can cost a small business thousands of dollars they don't need to waste.

What is the solution to this? General liability insurance. As an agent, it is imperative that you highlight this coverage in a way that your clients can best understand.

How do you do that?

Continue reading below to find out! We will cover all you need to know about selling insurance to your clients in a way that they best understand so that they can be successful. We also will point you in the right direction of who you can reach out to for further assistance and additional general liability insurance resources.

Explain What General Liability Insurance Coverage Is

Of course, as an agent, you know what general liability insurance coverage is and how it benefits your clients, but they may not. When selling general liability insurance, explain that it covers any third-party bodily injury. It helps to give them an example of how bodily injury coverage works.

For example, let's say your client owns a bakery, and one of their staff members cleans up the main floor, but they forget to put up a wet floor sign. One of their customers comes in to purchase some baked goods, but they slip on their way to the bakery case display.

The customer suffers some injuries and incurs medical expenses due to the accident. The bodily injury coverage will take care of that on behalf of the bakery so that your client does not have to come out of their own pockets.

Other Coverages Under General Liability

You want to ensure your client knows about the other situations covered under general liability.

Additional coverages under general liability:

  • Product liability
  • Third-party property damage
  • Advertising injuries

Using the same example above, let's now say that a customer eats a cookie that is claimed to be free of any peanuts and is made away from peanut products. Soon after consuming this cookie, they break out and have a severe allergic reaction, causing them to miss work for a few days.

To recoup what they've lost, the customer presents a demand letter to the business, asking them to pay their lost wages and medical expenses. Instead of reaching into their own pockets to pay for legal counsel, your clients can rest assured that their insurance company will take care of that for them.

Third-party Property Damage

Another example to present to your clients is how property damage works. Say you have a client who owns a cleaning business. As one of their associates cleans up a client's home, they accidentally break an expensive vintage lamp.

That customer turns to your client for reimbursement and demands they pay for it immediately. Although your client may be inclined to come out of pocket for that vintage lamp, they may be in over their head.

Your client may also not be aware of how actual cash value works or how even an expensive vintage lamp depreciates. If they decide to take on paying for the lamp on their own, they may end up paying more than they actually owe.

Advertising Injuries

In today's era, reviews are king. People are not afraid to share their experiences with small businesses online, and the more negative reviews a company has, the less likely they are to get the clients they deserve.

For example, if your client owns a cleaning business and one of their maid's comments online about another company doing a bad job, this could cause problems. If that company decides to sue your client for libel, it will not only hurt the reputation of your client's business, but they will have to pay for legal counsel to take care of the lawsuit.

To help take care of the legal aspect, your client can rely on their general liability insurance policy to handle paying for counsel. If the insurance company agrees that they owe for libel, the policy will pay for the damages, not the business.

Explain What Is Not Covered Under General Liability Coverage

It is essential for insurance agents to not only go over what the policy covers, but to explain what is not covered. For example, general liability insurance does not pay for any professional errors.

If your client wants coverage for any professional errors, they will need to seek out an errors and omissions policy. This policy covers professional errors such as missed deadlines, undelivered services, or misleading information.

For example, if your client is a real estate agent and they list a home stating that it has hardwood floors, but it is later found out that it's laminate wood flooring, their homebuyer may sue them. Errors and omissions coverages will take care of that lawsuit.

Employee Injuries

Although general liability insurance covers injuries caused to customers, it does not pay for any injuries sustained by employees. If your client's employee sustains an injury on the job, they will have to make a workers' compensation claim. Workers' comp covers any physical therapy, medical expenses, and lost wages for covered injuries and illnesses.

Damaged Business Property

General liability coverage only covers third-party property damage, not damages done to your client's business. In the event that your client's business catches fire, has a break-in, or some other event happens that causes damage to their business property, they will need to pay out of pocket unless your clients have a Business Owners' Policy. A Business Owners' Policy, also known as a BOP, helps cover the cost of the damaged business property so long as it is a covered event.

Damaged Business Vehicles

Commercial auto insurance differs from general liability insurance, and many clients get confused. Some assume that because they have general liability property damage coverage, it would extend to their vehicles, but this is untrue.

To ensure that your client has the right amount of coverage over their business and their business vehicles, they will need to seek out a commercial auto policy. The commercial auto policy will cover for any damages done to the car and any third-party damages caused by the vehicle.

Insurance Agents Best Practices

As an insurance agent, you want to ensure you present yourself in the best way possible. Sure, at the end of the day, you are here to sell a policy to a client to earn a commission, but it is best not to only look at it that way. As an agent, you want to build a meaningful and impactful impression on any new clients and the ones you already have.

Present as an Educator

The last thing you want to do is present yourself as a salesperson who is hungry to sell another policy for commission. Most clients are skeptical about getting insurance for their business, but they know it is necessary. Your job as an agent is to ensure they understand all of their options and thoroughly know what their policy does and does not cover.

When you present yourself as an educator and not a salesperson, your new clients are more inclined to want to hear you out. In general, most people may forget what you said, but they won't forget how you made them feel. If they have any questions, you want them to be able to reach back out to you for further guidance.

Build Rapport

In addition to presenting as an educator, you want to be empathetic to your new or existing clients. They already have a lot on their plate as busy business owners, so you should show them some care.

When you build that rapport with your clients, they will feel more comfortable with you. If they feel they can trust you and enjoy your service, they may suggest you to their other business associates.

Sell Insurance the Right Way

As an insurance agent, you want to make sure your clients understand their options when explaining general liability insurance coverage. This coverage is simple yet complex for those who may not know what it is.

To ensure that you have satisfied clients who keep their insurance and refer you to others, you want to meet your client's expectations and give them the top-notch service they deserve. If you are an insurance agent looking to partner with a reputable general liability insurance company, contact us for more information. We are here to help you grow your business and give you any resources you need to be a successful insurance agent.

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