General Liability Insurance
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Can I get general liability insurance without a business license?

Some businesses and self-employed individuals may not need a business license depending on their profession. However, they can still get liability insurance without a business license. Regardless of requirement, liability coverage is an essential part of risk management for any business owner.

What is general liability insurance?

General liability insurance protects your business from common, third-party liability claims. It will cover your legal defense costs if someone sues your business over a bodily injury, property damage, or advertising injury. This policy can pay for everything from hiring a lawyer to court-ordered judgements and settlements.

The most common risks that commercial general liability insurance (CGL) provides coverage for are:

  • Third-party bodily injuries. If a customer slips and falls at your business and is hurt, your policy can help pay for their medical expenses.
  • Third-party property damages. Your policy can cover expenses if your company accidentally damages or destroys another person's property.
  • Product liability. This coverage helps pay for lawsuits and other losses related to defective products, labeling errors that harm customers, and other product risks.
  • Personal injuries and advertising injuries. If someone sues your business over slander, libel, false arrest, or copyright infringement, a CGL policy can help pay the defense costs.

Additionally, small business owners often need a general liability policy to fulfill requirements for a lease, loan, or contract. For example, a landlord might ask to see a certificate of insurance when you sign a commercial lease.

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When do you need a business license?

Depending on where you're located and the type of work you do, you may need to obtain a business license before you can take on any clients.

Even if it's not mandated by your state, it's important to check county and city jurisdictions as licensing could be required by your local government. Also, to obtain certain business licenses, you might be required to carry different types of insurance or bonds.

Most construction professions are required to be licensed, such as general contractors, electricians, plumbers, architects, and engineers. However, each state has different requirements depending on the services you provide and experience you have.

Professional service providers who offer advice or services like real estate agents and lawyers, sometimes need professional liability in order to get licensed in their state. This policy is also referred to as errors and omissions (E&O) or malpractice insurance depending on the industry.

In some areas, you might not need a business license if you're doing business as yourself, in your own name. And while most state laws don't require independent contractors to have a business license, it's best to check with your local government to make sure.

How do I get a business license?

To get a business license, there are several steps to take before submitting your application to your local or state government. Some of these steps include:

  • Choosing your business name and structure
  • Obtaining an Employer Identification Number (EIN)
  • Researching which licenses you need and their requirements
  • Carrying any mandated insurance policies or bonds
  • Paying the fees associated with your business licenses

Take a look at our more in-depth look on how to get a business license.

Can you purchase general liability insurance without a business license?

As a sole proprietor or independent contractor, then most often yes. Because you're the only person in your company, there isn't a legal requirement to have a license to obtain a liability insurance certificate.

If your sole proprietorship or limited liability company (LLC) without a storefront or employees, your state or city might not require a business license to purchase a general liability policy. However, if you do have employees or maintain a physical business location, a business license is a must.

Businesses like freelance photographers usually don't need a license to operate their business, but are still able to purchase general liability insurance coverage. Photographers probably should because equipment strewn about at an event (lights, cords, cases, etc.) may be a tripping hazard and they could be liable for an injury those caused. Some clients might even require liability insurance.

Additionally, businesses like cannabis dispensaries may need to carry a general liability insurance policy to get licensed. You'll need to research the insurance requirements in your state to find out how much general liability coverage your business will need.

Likewise, even some self-employed businesses, like general contractors, may need a general liability policy to get licensed, depending on the state they work in.

How much does general liability insurance cost?

A small business owner calculating their general liability insurance payments

General liability insurance typically costs an average of $42 per month. This is based on the average cost of a general liability insurance policy.

Insurance providers look at a few factors when calculating the cost of a general liability policy, including:

  • Business operations and location
  • Business property and equipment
  • Number of employees
  • Policy limits and deductibles

What are the risks of not having general liability coverage?

Even though state laws don't generally require you to carry general liability insurance, not having this protection could put your business at serious risk for financial loss.

Judgements, settlements, legal defense fees, and court costs can be extremely expensive – no matter how frivolous the lawsuit or claim.

If someone files a claim against your business, you may end up spending several thousands of dollars out of pocket even if the lawsuit is dropped.

You may also find that some businesses or local governments will only enter a contract with you if you maintain a minimum amount of business liability insurance. They want to make sure your business can handle a liability claim, as well as complete the agreed upon work.

What other kinds of small business insurance might I need?

General liability insurance covers common business risks, though it does not protect against all of them. To be fully insured, small business owners should also consider the following types of business insurance:

Business owner's policy: A BOP bundles general liability coverage and commercial property insurance at a discount. It protects against the most common lawsuits and property damage.

Workers’ compensation insurance: Workers’ comp covers medical bills for work-related injuries and illnesses. Most states require this coverage for businesses with one or more employees.

Professional liability insurance: This policy covers professional mistakes and oversights, such as missing a project deadline. It’s also known as errors and omissions insurance.

Commercial auto insurance: Auto insurance is required in most states for businesses that own vehicles. It covers your legal bills, medical expenses, and property damage if one of your business vehicles is involved in an accident.

Cyber insurance: Also called cyber liability insurance and cybersecurity insurance, this policy protects small businesses from the high costs of a data breach or malicious software attack. It covers expenses such as customer notification, credit monitoring, legal fees, and fines.

How do I get affordable general liability insurance?

Complete Insureon’s easy online application today to get free quotes for general liability insurance coverage from top-rated U.S. insurance companies. You can also speak with an insurance agent about the types of coverage your business needs, and ways you can save on your general liability policy.

Once you find the right coverage for your insurance needs, you can usually begin coverage and get your certificate of insurance in less than 24 hours.

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Updated: February 12, 2024
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