General liability insurance

General liability insurance protects against the most common risks of running a business. It's typically the first policy small business owners purchase.

This type of business liability insurance provides financial protection if a customer slips and suffers an injury at your business, or if you accidentally damage someone's property. General liability also covers personal and advertising injuries, including defamation and copyright infringement.

It's sometimes referred to as commercial general liability insurance or CGL insurance.

Small business owners often need general liability insurance as part of the requirements for a lease, loan, or contract. For example, you might need to show a certificate of insurance when you sign a lease for an office.

General liability provides crucial protection against costly lawsuits that can affect any business, and it's affordable. The average premium is only $45 per month for Insureon customers.

General liability insurance provides coverage for common liability claims from third parties, or people outside your business.

Specifically, your commercial general liability (CGL) policy provides coverage for:

Most small businesses need general liability insurance, especially if you have a storefront or an office that's open to the public. Any business that interacts with clients and customers will benefit from this coverage.

This is true even if you work from home or use social media for business. You can't rely on homeowner's insurance to cover business-related claims, such as a delivery person who slips on an icy front step or a copyright infringement claim.

Landlords, mortgage companies, business partners, and clients often require general liability coverage. Most small business owners buy this policy right after they start their business.

If you’re a responsible business owner doing reasonably safe work—and you haven’t been sued often in the past—most insurers will be happy to provide coverage.

Examples of industries that can benefit from general liability the most include:

Generally not, but states may mandate it for certain industries like construction. Depending on your type of business, you may need liability coverage to get a license or a permit for your work.

Your business may need to show an ACORD certificate of insurance as proof of your general liability insurance coverage. This document verifies that your business can handle any injury or property damage lawsuits.

General contractors, plumbers, electricians, HVAC installers, and other tradespeople often need general liability insurance to get licensed in their state. You might also need it to get a building permit or other type of permit in your local jurisdiction.

Landlords and lenders often require general liability insurance, so they know they're covered in the event of an accident or lawsuit. You'll likely need to show proof of coverage before you sign a lease or get a business loan.

Your clients might require you to carry general liability insurance, often in a specific amount. You may need this coverage before they'll allow your workers on their property.

General liability insurance gives your clients peace of mind since they know they're protected in the event of an injury or a lawsuit. Clients often prefer to work with companies who are insured, so having coverage can give you an edge over the competition.

While general liability insurance is essential for most small businesses, it does not provide all the protection you need. You'll likely need to invest in additional insurance products to protect against out-of-pocket costs from other kinds of risks.

For instance, your policy does not include coverage for:

Any business type—including limited liability companies (LLCs), sole proprietorships, and home-based businesses—can be held liable and sued for customer injuries, property damage, or advertising injuries. That even includes independent contractors and subcontractors.

If you don’t want to purchase a commercial general liability (CGL) policy, you can ask your clients to add you to their policies as an additional insured. This will protect you for as long as you work for the client who insures you.

In addition to carrying general liability coverage for themselves, contractors sometimes must buy owners and contractors protective (OCP) liability insurance to protect project owners and win contracts.

Most small business owners choose general liability policy limits of $1 million per occurrence / $2 million aggregate (also called general aggregate). This means the policy will pay up to $1 million to cover a single incident, with a $2 million limit on all claims during the policy period, typically one year.

Ninety-one percent of our customers choose a policy with these limits, while five percent choose a policy with $2 million / $4 million limits.

If your business has high risks or a contractual requirement for higher limits, you can boost your coverage with commercial umbrella insurance. Umbrella insurance increases your maximum policy limits, so your insurance company can cover more expensive claims.

Ideally, aim for coverage that's affordable and matches your business needs. You'll want enough coverage to pay for a lawsuit if you're sued. Consider the size of your business and frequency of customer interactions to determine your exposures and risk of financial loss.

A business owner's policy, or BOP, is a package that includes both general liability coverage and commercial property insurance. It's often less expensive than buying these policies separately.

The property insurance included in a BOP covers theft, fires, storms, and other incidents that damage or destroy business property. Businesses that don't own or rent a building can protect their property with a business personal property endorsement on their general liability policy instead.

Small businesses with low risks are often eligible for a business owner's policy. For small and midsized businesses with moderate risks, there's the option of a commercial package policy (CPP).

Both BOPs and CPPs often include business interruption insurance, also called business income coverage, which covers lost profits and other financial losses tied to a temporary closure. You can often include other coverage options as well.

No, general liability insurance only covers injuries that happen to people outside your business (third parties).

Workers' compensation insurance covers medical bills and disability benefits for employees who are injured on the job. It's required in most states for businesses that have employees.

Even sole proprietors can benefit from workers' comp, as personal health insurance may deny claims for injuries related to your job.

General liability insurance has several exclusions. It won't cover intentional injuries or property damage—which can be criminal offenses—along with willful negligence.

While a general liability policy typically covers damage to someone else’s property, that doesn't include items in your care, custody, and control. You can fill this gap with bailee coverage, which is a type of inland marine insurance.

Other common exclusions include:

• Pollution
• Data breaches
• Proximity to a railroad
• Garages
• Injuries sustained by a subcontractor's employee

To fill gaps in coverage, you can often add endorsements to your policy.

You can find additional information in our frequently asked questions about general liability insurance.

If you have any other questions about coverage, you can contact an Insureon agent.

Obtén más información sobre el seguro de responsabilidad civil general (en español).