Millions of people are hired annually in the United States as temporary or contract workers. After a challenging 2020 in a global pandemic scenario, many companies entered 2021 considering using this alternative employment method for the first time.
You’ll need to be sure you’re educated about the technicalities of hiring contract workers if you fall within one of the following categories:
- a business owner who is about to begin work with their first contractor ever,
- an entrepreneur starting a business and considering the option, or
- simply someone wanting to work as a contractor.
This may be the time to invest in commercial general liability insurance as well, to ensure that you’re covered in the case of any accidents or damage to customer property while you’re employing contract workers.
What Is Commercial General Liability Insurance?
Commercial general liability (CGL) is an insurance policy that provides coverage for a company in cases of bodily injury, personal injury, and property damage that has been caused by the company’s operations or has occurred in its facilities.
Considered one of the essential coverages for small businesses, CGL is usually held by a company when employing contract workers, but some contractors can also carry it themselves. If you plan to work with temporary or contract employees in 2021, learn about CGL here.
What CGL Covers
If a customer claims your business (or the actions of a specific employee) caused bodily or property damage, or reputation damage, CGL can protect you.
The insurance will help cover attorney and legal consultation and trial fees and medical payments in personal injury whenever necessary. It can also help pay for settlements and judgments if a legal case becomes necessary.
When You Might Need CGL
If bodily injury and property damage seem too vague, imagine the following situations in which CGL coverage would be able to protect you from costly lawsuits:
- One of your employees was handling landscaping service or electrical installation at a customer’s home and caused damage to valuable property—for example, they dented the client’s car with gardening equipment or caused a fire with a bad electrical installation.
- One of your employees causes injuries with equipment left in the customer’s space—for example, and a ladder used while painting falls on a customer.
- A customer or supplier who visits your company slips and falls on a wet or recently-polished floor and consequently breaks their leg.
- An advertisement for your company results in defamation or libel.
How Much Does CGL Cost?
The cost of a CGL policy depends on several factors, primarily your business sector. If you have a high-risk business (such as a construction company or chemical industry), your coverage will be more expensive.
In addition to the type of work, these are the factors that influence the cost of your CGL:
- Business History– The insurance company will consider how long you have been in business and how many personnel changes your company has had during that time. If you made many relevant insurance claims in the past, this would also influence the cost of your policy.
- Business Revenue– The insurance company will also consider the amount of revenue your business has generated recently and whether the amount is trending upward or downward.
- Business Size– The cost of CGL increases according to the number of employees you have.
- Policy Details– Aspects such as how much coverage you want, extend insurance to franchises, and other specifics can significantly affect the amount you will pay.
What You Should Know in 2021
2020 was a challenging year for small businesses: according to a recent report based on interviews with small business owners, only 34% said their operations were profitable. Businesses related to tourism and art suffered the most considerable losses, but the pandemic also affected restaurants, construction companies, and retail in general.
Many businesses were forced to cut their staff last year because of the restrictions, which have continued this year. These entrepreneurs can now consider looking for contractors to replace the laid-off employees, and therefore may need CGL for the first time.
If you already have coverage, remember that what happened in 2020 can influence the price of renewing your policy. If your business has reduced the number of employees in the last year, for example, this can change your coverage costs. Lost revenue can also affect your 2021 CGL rates.
A Time For Protection
Regardless of size or industry, every company is vulnerable to costs associated with liability. For small businesses, the financial losses can be disastrous. Commercial General Liability Insurance is protection you must consider.
With the growing demand for temporary or contract employees, it may be a good time to review your insurance coverage or contract CGL for your company. After all, you can be held responsible for accidents caused by these workers.
Also, remember that, while comprehensive, CGL doesn’t cover all risks. Depending on your industry, it may be worth it to consider other coverage as well.