General liability insurance can help cover many risk factors in your business. As a business owner, your goal is always to provide a product or service without causing harm to another party. Yet, there are times when you may say or do something that causes reputational harm to someone else. You could be responsible for their losses as a result.
It's important to understand what reputational harm is and how it impacts your business. Here's what you need to know.
What Is Reputational Harm?
Let's say you are trying to win over a customer. You know your competitor spoke to the customer just a few days ago. You want the business. You lie about the other company, stating it has lawsuits filed against it or does poor quality work. You have no evidence to back up your claim.
In this situation, you might cause unfounded harm to another business. That business could lose customers, money and trust in the community. More specifically, reputational harm could include defaming the products or services of another company. It could include violations of privacy. It can also include instances of libel or slander.
The affected business may want to file a lawsuit against you for the reputational harm you caused. In this case, your business may be responsible for paying for the perceived financial losses of the other company. Those payments can get expensive.
Long story short, if you cause financial damages to another party in any of these areas, you could have to pick up the pieces.
What Does General Liability Insurance Do?
General liability insurance is a type of protective tool for business owners. It often helps cover most of the risks that fall under reputational harm. It will not cover numerous claims.
For example, if you continue to slander a company, the policy will not continue to cover your losses. However, it can cover many types of financial losses other businesses or individuals suffer as a result of one instance of reputational harm. Keep in mind this may also cover the actions and words that one of your employees used as well.
If there is any risk of reputational harm present, speak to your Busha-Okeson Insurance agent. Make sure you have general liability insurance that covers the risks. And train your employees not to put you in position to have to file a claim for reputational loss. This can be a costly claim that is not worth paying for in increased insurance costs.