The 4 Other Types Of People Who Get Protected By General Liability Insurance

Your insurance policy protects people other than yourself.

By now you know that your general liability insurance policy protects you, the entrepreneur, as well as your company assets. However, your insurance protects other business stakeholders as well.

Here are 4 types of people covered by your general liability insurance policy.

1. Business Partners

You may have started your company with one or more partners who have also contributed equity to the business. If that's the case, then you should know that your general liability insurance policy covers them as well.

In fact, the coverage is mutual. If you do something negligent and someone sues the company, your partners are covered. Also, if one of your partners does something negligent and someone sues the company, you're covered.

2. Employees

Your general liability insurance policy not only protects people who have a financial interest in the company, it also protects employees as well.

Once again, the protection is mutual. If your employee does something negligent, then your insurance policy can cover you. However, the coverage extends to the employee as well. This is because the employee was acting as a representative of the corporate entity (i.e., your business).


Your business insurance policy protects employees as well.

3. Spouses

Even though you've formed a limited liability company or a corporation, sometimes you can still be held personally liable for damages if someone decides to sue you. In that case, you'll be glad that you have general liability insurance because it will pay for the damages.

But you won't be the only one who's glad if you're married. Your spouse jointly owns your assets with you. If you're sued personally, and lose, then your spouse stands to lose a lot as well. This kind of financial loss can also lead to marital strife, which makes the whole ordeal that much more unbearable.

General liability insurance will not only protect you from forfeiting a significant portion of your personal assets because of a lawsuit, it will also protect your spouse and, of course, the rest of your immediate family as well. And, it just might save your marriage.

4. Subsidiaries

If you've formed a C Corporation and you've decided to purchase the stock or the assets of another company, then you should know that the other company will be protected by your general liability insurance policy as well.

As a rule of thumb, your corporation must own 50% or more of the subsidiary. Otherwise, it might not be covered. This makes sense, because if your corporation does not own at least 50% of the company, then it really can't claim majority ownership.

General liability insurance is indispensable to any small business. This is because it not only protects the assets of the business, but also the people who are directly or indirectly involved in the day-to-day operations of the business.