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Small business ownersAs a small business owner, you have a duty to protect your company from unnecessary risk. You probably do your best to prevent issues from happening. But, accidents still happen. Having appropriate insurance coverage can help you avoid financial ruin if a lawsuit ever occurs. Here are a few frequently asked questions about purchasing general liability insurance.

Do I Need General Liability Insurance to Stay Legal?

The simplest answer to this question is that general liability insurance is not a legal requirement. However, certain industries do require this type of policy to apply for professional licensing. There are also situations where you might work with larger clients that want to see proof of coverage before doing business with you. It is important to have coverage in place beforehand.

How Much Coverage Do I Need?

The amount of required coverage generally depends on the industry you are in and what your business does. For example, contractors need more insurance coverage than computer repair professionals. Restaurants need different coverage than retail store owners. However, the most standard level to start with is $1 million per instance with a $2 million aggregate limit over the life of the policy. You'll often find this coverage among your most common choices.

What Industries Need General Liability Insurance Coverage?

Just about every small business could stand to have general liability insurance coverage, but some industries need it more. Examples include construction companies, auto repair shops, retail stores, restaurants, and hair salons--i.e. situations where clients routinely come into your brick-and-mortar location or there is an element of danger involved in everyday operations. Even professionals such as IT consultants, graphic designers, freelance workers, and real estate agents should consider coverage. To find out if your industry needs general liability coverage, speak with a local Dallas business insurance agent.

What’s the Difference Between a Business Owner’s Policy (BOP) and a General Liability Policy?

The difference between the two options is slight. Business owner’s policies (BOPs) include a provision for general liability coverage, but BOPs also feature extra coverage for property damage. Additionally, they often cost a bit less. Depending on your needs, this can be a better and more cost-effective alternative.

Nevertheless, with a BOP, you'll have more protection within more policy. Therefore, you'll likely need to decide whether this investment is actually more practical than you might think.

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