General liability insurance is often referred to as GL or business liability insurance. It is coverage that can protect your business operations from a variety of claims which could arise including bodily injury, property damage, personal injury, attorney fees and additional expenses. This coverage may be written in one of two ways- Claims-Made or Occurrence:
A Claims-Made policy covers claims that arise from injury or damage which occur during the policy period and are reported to the insurance company during the policy period. Claims that arise from events outside the policy period or reported to the insurance company outside the policy period are not covered. This coverage comes in two forms-Prior Acts or Extended Reporting Period.
- Full Prior Acts coverage is a type of claims-made liability policy that does not contain a retroactive date so it covers claims arising from acts that took place at any time prior to the inception date of the policy, regardless of how far in the past.
- An Extended Reporting Period (EPR) is a designated time period after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period. In other words, it is a time frame that allows the insured to make claims after the claims-made liability coverage has expired.
An Occurrence policy covers claims arising from injury or damage occurring while the policy is in force, regardless of when the claim is first made. The following example helps to explain the differences between Claims-Made and Occurrence policies:
- Let’s say that you own a building from which you operate your business and where your customers come to shop. In August 2019, one of these customers slips and falls in your store. He notifies you of the incident right away but also says he doesn’t think he is injured. However, in November 2019, you receive notice that this customer has filed a claim for an injury he sustained in the August 2019 fall.
- A Claims-Made policy with a policy period running from November 1, 2018 to November 1, 2019, will not provide coverage because the claim was made after your policy expired. If, however, you purchased an Extended Reporting Period (EPR) from your insurer when your policy expired, the claim may be covered.
- An Occurrence policy with a policy period running from November 1, 2018 to November 1, 2019 will cover the claim because the incident occurred during your policy period.
GL insurance protects you for the unexpected, making sure your business is able to operate through any obstacle you may encounter. Talk to your agent about the specifics of your business to make sure you have the correct and appropriate coverage in place.
