General liability insurance

Generally not, but states may mandate it for certain industries like construction and cannabis. Depending on your type of business, you may also need coverage to get a professional license in your state.

While commercial general liability (CGL) insurance isn’t typically required by law, it’s still likely required by your landlord, mortgage company, business partners, or clients. For example, Amazon sellers are required to carry coverage when their sales reach a certain threshold.

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

Most importantly, the certificate gives your property manager, bank, or customer peace of mind that they won’t be stuck paying the costs of a lawsuit against your company.

Find out more about when general liability insurance is required.

Like any small business owner, independent contractors can be sued and held liable for customer injuries, customer property damage, or advertising injuries.

While contractors who don’t have a physical location or expensive equipment probably don’t need a business owner’s policy or commercial property insurance, they will still benefit from general liability insurance.

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 cover you for as long as you work for the client who insures you.

Keep in mind that your clients might pay a higher insurance premium if they add you to their general liability policies, and your coverage will end once the contract expires.

If you are purchasing general liability insurance to fulfill the terms of a contract or lease, you need to make sure that your coverage meets the requested policy limits.

Otherwise, you should aim for an amount of coverage that matches your business needs. Simply put, you want to make sure your policy can pay for a lawsuit if you’re sued. Consider the size of your business, the number of employees, and its business operations to determine your exposures and risk of financial loss.

Most small businesses opt for the standard $1 million per occurrence / $2 million aggregate policy limits. This means the policy will pay up to $1 million to cover a single claim, with a $2 million limit for the lifetime of the policy, typically one year.

If your business has high risks or revenue, you can extend your general liability insurance coverage with commercial umbrella insurance. Umbrella insurance increases your maximum policy limit, meaning your insurance company can cover more expensive lawsuits.

When buying a policy, also make sure the deductible is something you can easily afford. If you can’t pay for it in a crisis, your insurance won’t activate to cover your liability claim.

General liability covers customer injuries, customer property damage, and advertising injuries. Professional liability insurance covers disputes over the quality of professional services.

Almost all businesses need general liability insurance, but businesses that provide professional services need added protection from mistakes and unhappy clients.

That’s where professional liability coverage comes in. This policy helps professionals like accountants, lawyers, consultants, and insurance agents avoid high costs from lawsuits related to the quality of their work.

For some industries, such as media and advertising professionals, general liability insurance will not cover libel, slander, or other advertising injuries. These businesses instead require media liability insurance, which is a form of professional liability insurance.

Read more about general liability vs. professional liability insurance.

General liability insurance has some additional coverage exclusions. For example, it doesn't pay defense costs for intentional copyright infringement or willful negligence – which can be criminal offenses. It also doesn't cover intentional injuries or property damage.

While a general liability policy typically covers damage to someone else’s property, most policies exclude times when you have temporary possession of the items. In insurance terms, this is called care, custody, and control. Small business owners can fill this gap with bailee coverage, which is a type of inland marine insurance that can complement both general liability and commercial property coverage.

Read your policy carefully to see what is and isn't covered. To fill other gaps in coverage, you can also add endorsements to your policy. Check with a licensed insurance agent to make sure your general liability policy includes all the coverage you need.

If you want to learn more about this policy, you can find additional answers in our frequently asked questions about general liability insurance.

If there are any additional questions you have about coverage, you can also contact an Insureon agent.