What's the difference between general liability and auto liability insurance? While both of these coverage protect your business from third party claims of bodily injuries & property damage - they do it in different ways under different circumstances.
Difference Between General Liability And Auto Liability Insurance
Many business owners use company vehicles and want to ensure that their property and people are safe while conducting business. Therefore, they may think that auto liability insurance is sufficient, but they could be wrong.
Many insurers recommend that you have auto liability and general liability to cover the many liability risks that face companies. Learning about the difference between general liability and auto liability insurance, and their specific protections will help you understand the reasons some companies require both.
Who Requires Auto Liability?
You should have this type of insurance if your company owns, rents, or leases any vehicles. However, it doesn't stop there. If your employees are likely to drive the company-owned, rented, or leased cars, you should consider Hired Auto insurance, as well. Along with this, you may need non-owned auto liability if your employees drive personal vehicles while conducting business, such as taking money to the bank or delivering products to other companies or individuals. You may also want to consider commercial vehicle insurance if you or your employees drive a company car for personal use.
It's A State Requirement - Many states require that you have the minimum amount of insurance, though some states do allow you to show proof of financial responsibility, which means you will pay if you or an employee is at fault during an accident where the property is damaged, or people are injured.
In some cases, your state may also require that you have underinsured/uninsured coverage to protect you in case the at-fault driver doesn't have insurance or doesn't have enough. However, comprehensive and collision insurance is usually optional.
How Much You Need - While most insurers offer you minimum coverage that is considered legal for your state, you may find that it isn't enough. There aren't any clear rules about how much coverage you need, though most companies choose at least $100,000 coverage for each vehicle, recommending a minimum of $500,000.
Commercial General Liability (CGL)
The difference between general liability and auto liability insurance. CGL insurance covers a business for personal injury, property damage, and bodily injury, not necessarily because of vehicle usage. As long as the damage or injury was caused by your operations or products, or happened on company property, general liability can kick in. Most people don't believe that they need CGL if they already have auto liability, but the problem is that you never know when something will go wrong on company property or if one of your products are defective. However, it doesn't cover every risk that you may face.
Many times, general liability policies have various levels of coverage. A difference between general liability and auto liability insurance is your policy could include premises coverage, which protects you from claims that happen at your physical location during traditional business hours. It can also offer coverage for property damage and bodily injury resulting from finished products. Many times, the policy will have exclusions for what actions are and are not covered. For example, your policy may not cover costs that are associated with product recalls.
If you desire more than one million dollars in coverage, you may want to take out a business umbrella policy, which picks up where you other liability coverages stop. For example, if your current vehicle liability policy covers $1,000,000 and your general liability covers the same amount, but you are sued for $1.5 million, the umbrella policy can cover that last $500,000, so you don't pay anything out of pocket.
You can also choose excess liability coverage that can be purchased on top of the general liability policy, which covers any claims that exceed your limit. You should also realize that general liability policies can be claims-made or occurrence based:
- Claims-made policies cover you for a particular time period and covers the claim that is made during that period, even if the event itself happened earlier or later.
- Occurrence policies cover claims that occurred during a particular time and won't help you if the event occurred before the policy went into effect.
Difference Between General Liability And Auto Liability Insurance - The Bottom Line
We hope this article on difference between general liability and auto liability insurance has been informative. It is possible to use a general liability policy to cover certain auto insurance claims, such as when you are using rented vehicles or your employees are driving their own vehicle on company business. Having both policies can protect your business more completely.
Further Reading On Commercial General Liability Insurance
- CGL Exclusions Explained
- Contractors General Liability Insurance
- Difference Between General Liability And Auto Liability Insurance
- Does General Liability Insurance Cover Subcontractors?
- General Liability Insurance Claims-Made vs Occurrence
- Product Liability Insurance vs General Liability
- What Damages Are Covered By A CGL Policy?
- What Is Products And Completed Operations Coverage?
- What Is The Difference Between Per Occurrence And Aggregate Liability Limits?