Insurance Made Simple Part III: Comprehensive General Liability Coverage – How to Protect the Company’s Assets


Why worry about and purchase General Liability coverage? Most banks do not require CGL insurance to get a mortgage, so why is it important?

Accidents can and DO happen! If someone should sue your business as a result of a real or perceived loss, the high cost of legal defense and/or settlement could be enough to put you out of business.

General Liability insurance coverage is purchased to protect businesses from monetary damages it may become legally obligated to pay because of bodily injury or property damage to a third party that results from an accident or occurrence.

Restaurants, caterers, bars, taverns and social clubs all have potentially serious general liability issues due to premises and operations exposures. Whenever a patron enters your establishment, your business could be found liable should an accident ensue. To safeguard against the unpredictability of accidents, oversights and lawsuits, General Liability insurance is a must!

General Liability insurance has three major coverage parts: Coverage A – Bodily Injury and Property Damage, Coverage B – Personal and Advertising Injury and Coverage C – Medical Payments.

Coverage A – Bodily Injury and Property Damage

Bodily Injury – Your business operations could cause serious bodily harm or even death to patrons. General liability insurance will defend your business and indemnify a third party if you are responsible for the injury, disease or sickness.

Property Damage – This coverage pays for damage or loss to someone else’s property caused by an incident that you are legally responsible for.

Coverage B – Personal and Advertising Injury

This coverage responds to the following types of claims: publishing, verbally or in writing, false information that libels or slanders a person or organization; copying another company’s style of doing business or advertising concepts; and/or infringing on another businesses title, copyright or slogan.

Coverage C – Medical Payments

Medical payments coverage is available for emergency medical treatment in the event that a person is injured on your premises. This coverage responds without any regard to legal liability or fault. Medical Payments is considered “good will” coverage and hopefully prevents an injured person from suing to collect monies to pay their medical bills.

The National Restaurant Association states that slips and falls are the most frequent general liability claims made across the industry. Spills, slippery floors, poor maintenance of parking lots and floors, dim lighting, and stairs without handrails all contribute to unsafe conditions.

The U.S. Center for Disease Control (CDC) estimates that 48 million cases of foodborne illness are reported each year. Improper cooling, infected employees, failure to reheat food to proper temperatures, cross contamination, improper cooking or cooling, and foods from unsafe sources are just a few of the causes of foodborne illness.

What can you do to prevent or reduce the chances of patron injuries and claims?

Implement some risk management techniques or simple safety best practices.

Prevention of Slip and Falls:

  • Perform timely weather-related maintenance of parking lots and entry areas
  • Conduct periodic inspection/repair of flooring, stairs, sidewalks and parking lots
  • Implement a maintenance program to inspect and repair furniture and fixtures
  • Install handrails on stairways and ramps
  • Maintain adequate lighting both internally and externally
  • Ensure quick cleanup of spills
  • Use slip-resistant floor materials and treatments
  • Install restroom soap, hand dryers and paper towel dispensers in areas where soap and water drips are minimized

Prevention of Foodborne Illness:

  • Educate employees about food safety and hygiene by training them in a Serv Safe Food Handling Training program (or similar program)
  • Implement a hand washing program for employees
  • Install hands-free ice dispensers
  • Require the use of disposable gloves for any food contact
  • Maintain proper refrigeration and cook all food to appropriate temperatures
  • Avoid cross contamination by employing proper cooking and surface cleaning procedures
  • Implement a stored food dating system with shelf life labels
  • Restrict sick employees from food handling areas

Egress and Fire Safety

  • Install smoke and fire alarms wherever needed
  • Regularly test emergency power sources for egress lighting
  • Ensure egress areas are maintained, free and clear
  • Adhere to maximum occupancy regulations

Purchasing General liability insurance is a MUST for any business owner to protect their business. However, it is important that business owners implement some risk management techniques to prevent them from happening in the first place. Protect your reputation, protect your livelihood – you don’t want a lawsuit to put an end to your business.

Sandra Haley is the Senior Vice President: Underwriting & Marketing at Hospitality Insurance Group.


Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.