We can run our business as smoothly as possible. Never the less, the situation can change for the worse in a heartbeat. Luckily, we can cover for these eventualities with insurances. There are two types of liability insurances, public and general. Both of these are covering many different types of business situations. It is up to us to calculate which one we need. In this article, we will cover all the differences between the two so we can make an objective business decision.
1. Pricing
One of the main differentiating factors between the two is the price. General liability insurance is much more expensive. The reason for it is that it covers everything that may happen when doing business. Catastrophic events, injuries, intellectual property infringement, etc. The coverage is much vaster than Public liability insurance offers. This coverage and associated price often make general liability insurance seem too much. This is especially true for small and medium-sized businesses. Because of this, public liability insurance seems like a better fit for smaller companies. The premiums can run much lower but still offer small companies a peace of mind.
2. Coverage
As we have touched on, general liability insurance covers most situations. It covers everything with the exception of worker’s compensation and professional liability. It is that simple. On the other hand, public liability insurance covers the liabilities of a customer’s injury while on business property. In other words, if any injury is suffered by a third party while on business property, all the fees are covered. Associated legal fees are covered by the insurance company. For most smaller companies this type of coverage can mean the difference between staying in business and going under.
3. One versus the other
There are differences between these two plans and we have already covered some of them. Both of them have weaknesses and strengths associated with them. Public liability insurance policy offers a minimum amount of liability coverage. It covers injury, negligence, and accidents. This makes them relatively economical and thus, especially suitable for smaller and medium-sized businesses. Now we get to the limitations. They cover liabilities in relation to the public. It does not cover claims from business’s employees, investors, and vendors. Any expenses of such nature are not covered by the insurance company and are the responsibility of the business owner. On the other hand, general liability insurance is the more comprehensive of the two. It protects us against losses incurred by the public as well as all the others previously mentioned. Naturally, these policies tend to be much more expensive, rendering them unreachable by smaller businesses. But the bigger price tag does mean broader coverage. Most of the foreseeable losses are covered and more business assets are protected. These plans are not compulsory, meaning there are no legal requirements. But they are quite necessary since all businesses interact with the broad public in some way. Even a home-based office should consider public liability insurance if it is used as a meeting place. This way a public liability compensation can take place if the need arises and our small business will be safe from unexpected expenses.
Considering all the factors such as price, coverage, and limitations we can make a calculated decision based on our needs. When it comes to smaller businesses, public liability insurance far outweighs the general liability insurance plan. Most of the times it is due to the price associated with it and the overkill nature of the latter. At such early stages, smaller businesses simply do not need such a vast coverage that general liability insurance offers. On the other hand, large businesses with higher stakes on the line are best off with a general liability insurance plan. Since there are many more potential claims that can be made against them, this comprehensive coverage is all but necessary. For a large corporation, the benefits and security associated with such a plan far outweigh the costs. No matter our current position in the global market, there is a plan for us. These will protect us from unforeseen circumstances and even bankruptcy. With this information, we can make the educated decision custom-tailored for our own needs.