The terms General Liability and Total Liability sound like exact synonyms. In the insurance industry, they are two completely different things.
Contractors purchasing a policy will definitely need some form of general liability coverage, but they may also want to extend that coverage with a higher policy limit. Total liability coverage adds to the total allowed sum of claims for not just general liability policies, but potentially for other coverage like worker’s compensation and commercial auto insurance. For this reason, total liability policies are often called “umbrella policies” since they increase the amount of coverage for several types of claims at once.
Still confused? Read on to learn more about the specific differences between general liability and total liability coverage.
General Liability Coverage Explained
For anyone purchasing insurance coverage for their contracting business, a general liability policy is an absolute necessity. Whether bought separately or included as part of a business owner’s policy (BOP) package, general liability coverage protects you against costs that occur when your business somehow causes a loss to an outside party.
General liability coverage handles claims relating to:
- Property damage
- Bodily injury
For instance, someone enters a new construction job site that your business is working on and injures themselves. A general liability policy will help cover claims related to that person’s injury and many of the legal costs should they decide to file a lawsuit over the matter.
A general liability policy will often have set coverage limits for each type of claim. Medical costs for injuries, for example, could cap out at $1,000,000 per person or $2,000,000 per incident. This coverage means that if your business somehow cause an accident that injures five people, and each injury somehow costs $500,000 in medical costs, not every person will be able to get their full medical needs paid for.
On top of that, policies have “aggregate limits,” which have a maximum amount of coverage for all types of claims. Since a single incident can cause both expensive property damage and bodily injury, maxing out your aggregate limit can be easier to do than it sounds. To increase the aggregate limit and the amount of total liability coverage offered, a business owner can purchase an “excess liability” policy, also called a total liability policy.
Total Liability Coverage Explained
As was just stated, total liability policies increase the amount of maximum available coverage in the event of extreme circumstances. Since they are only adding on to other policies, they can never be purchased by themselves. They often have lower premiums than normal policies, since they only come into effect when the other policy has reached its max coverage limit.
The best part about total liability coverage is that it can increase the amount of coverage for almost all of your policies. That way, an on-the-clock employee in a company car is just as protected from enormous liability costs as the job site is. You can also often choose to increase individual coverage limits in the event that you are particularly worried about one type of risk, such as a lawsuit.
Visit our website to learn more about what general liability policies cover and how a total liability policy can lessen your risk for all sorts of occupational risks.