How To Make a General Liability Claim

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When small business owners buy general liability insurance, many assume they’ll never file a claim. Yet accidents happen and people make mistakes. Unexpected events can cause injuries to people or damage to property. 

Because general liability claims aren’t uncommon, business owners should have a basic understanding of the claims-filing process. You need to know when to file a claim, how to go about it, and what will happen after your claim has been submitted. Learn more about handling general liability claims for your business and more.

Key Takeaways

  • General liability insurance protects your business against third-party claims for bodily injury, property damage, and personal and advertising injury.
  • You should notify your insurer immediately if you’ve received a complaint or demand from a third party or if an incident has occurred that could result in such a complaint or demand.
  • Many insurers provide a form on their website for reporting incidents and claims.
  • Once you’ve filed a claim, the adjuster assigned to your case should keep you informed about the status of your claim until it’s been resolved.

What Is General Liability Insurance?

General liability insurance covers claims against your business by customers, clients, and other third parties for bodily injury, property damage, or personal and advertising injury. It covers claims for bodily injury or property damage caused by accidents that occur on your premises or at a job site, or that result from defects in products you make or sell or work you’ve completed. It also covers claims against your business for offenses like libel, slander, false arrest, and malicious prosecution.

General liability is a type of third-party insurance, meaning it covers injury or damage the policyholder causes to someone else. Third-party insurance differs from first-party insurance, which covers injury or damage sustained by the insured. An example of first-party insurance is auto physical damage coverage.

General liability (also called business liability) insurance is a “must-have” for most companies. It covers many types of claims that are commonly filed against businesses. 

When Would You File a Liability Claim?

You should file a liability claim if you’ve been served with a lawsuit or received a complaint from a third party regarding bodily injury, property damage, or personal and advertising injury for which your business is allegedly responsible. You should file an incident report if an accident or event has occurred and you think it might result in a claim. Here are examples of events you should report to your insurer. The first three should be reported as claims, and the last should be reported as an incident only.

  • A client was visiting your business office when she tripped and fell on a slippery floor. She has filed a complaint demanding compensation for a broken leg.
  • A customer complains that he broke a tooth on a cherry pit while eating a pie he purchased from your bakery business. He demands reimbursement for the cost of a dental implant.
  • A paint manufacturer has sued your painting company, alleging that you used copyrighted information without permission in a recent ad campaign.  
  • An employee of your construction company was using a forklift to move building materials at a job site when he accidentally backed into a truck owned by a site visitor. The visitor has not yet filed a claim.

Most liability policies require you to notify the insurer of any claim, suit, or incident that could result in a claim “as soon as practicable,” which means as soon as reasonably possible. By reporting your claim promptly, you’ll enable your insurer to investigate the claim when the evidence is still fresh. Lawsuits are especially time-sensitive. If your business is sued and you fail to respond in a timely manner, the court could issue a default judgment in the plaintiff’s favor.

Ignoring a claim or incident won’t make it go away. Any delay in reporting the incident will only increase the chance that the claimant will receive a large payout.

How To File a Claim

The first step is to contact your agent or insurer. Claim-reporting procedures vary, but many insurers provide both a phone number and an online form for reporting claims. If you file your claim by phone, you’ll probably be asked to submit a report in writing. Here’s the type of information you’ll need to complete the form:

  • Insurance account information. Includes your firm’s name and address, the preparer’s name and contact information, your policy number, and details about the loss. Your insurer will want to know when and where the accident occurred, what happened, who was involved, and who witnessed the events.
  • Injuries. The name, address, and contact information for anyone who was injured. You’ll need to describe their injury, the medical facility where they received treatment, and the name of their attorney (if they have one).
  • Property damage. If the accident caused damage to someone else’s property, you’ll need to provide the property owner’s name, address, and contact information. The insurer will also want to know what type of property was damaged, the extent of the damage, and the names and contact information for any witnesses.
  • Your contact information. Your insurer will need your contact information and the best time to reach you. 

What Happens After You File?

Once you’ve submitted your claim form, your insurer should provide you with a claim number and the name of the adjuster who will handle your claim. If your claim involves a lawsuit, your insurer may assign an attorney to assist with your claim. The adjuster or attorney should meet with you, the claimant, and any witnesses to obtain details about the accident. Your adjuster should keep you informed as your claim is investigated and settled. Most liability claims are resolved out of court. 

Frequently Asked Questions (FAQs)

How much does general liability insurance cost?  

According to the online agency Insureon, a typical small business spends about $42 a month, or $500 a year, for general liability insurance.

When must the insurer respond to my claim?

Many states have laws that require insurers to acknowledge claims within a specified time period, such as 14 days after they receive the policyholder’s communication.