General Liability Insurance
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When is general liability insurance required?

General liability insurance is not usually required by law, but business owners should be aware of situations when a licensing body, a client, or a lessor might require this common type of coverage.

Is general liability insurance required by law?

No, general liability insurance is usually not required by law. However, some states include general liability insurance in their licensing requirements for construction contractors or  developers. To find out if your state requires general liability coverage, see its business licensing criteria.

When do small businesses need general liability insurance?

Most small business owners purchase general liability insurance shortly after they start a business. Situations that drive business owners to get this policy include:

Applying for a professional license. Real estate agents, dentists, and accountants need a license to practice in the United States. The requirements for a license could include general liability insurance.

Signing contracts with larger companies. A company that hires a general contractor, engineer, or landscaper to complete part of a larger project may require you to obtain this policy.

Signing an office lease. An architect, electrician, or another professional who rents an office or workspace may need to obtain general liability insurance to fulfill the lease requirements.

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Regardless of your type of work, you’ll likely need a small business license from your state or local government in order to operate in your industry.

General liability insurance gives your clients piece of mind

Clients and companies often require this insurance because it offers them reassurance about your business. Because general liability insurance covers many common claims, clients know that your business's finances are relatively secure. Clients want to know that you'll be able to deliver the work you're contracted for, and that a lawsuit or other covered event won't prevent you from finishing the job.

General liability insurance also reassures your clients that you'll be able to compensate them if you damage their property or injure someone with your work.

To learn more about how general liability insurance protects businesses, read our article that provides general liability insurance claims and lawsuit examples.

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How much general liability insurance coverage do I need?

General liability insurance is not a one-size-fits-all policy. A business can choose policy limits that match the appropriate level of risk. Plus, you can customize your general liability policy with endorsements that cover specific risks.

Which policy limits should I choose?

Most small business owners that purchase general liability through Insureon choose a $1 million / $2 million policy. This includes:

$1 million occurrence limit. While the policy is active, the insurer will pay up to $1 million to cover any single claim.

$2 million aggregate limit. During the lifetime of a policy (usually one year), the insurer will pay up to $2 million to cover claims.

Find more information about general liability insurance costs.

What additions to the policy might I need?

General liability insurance is a versatile policy. You can modify it by adding endorsements for specific risks. Endorsements include:

Product liability insurance. This policy covers legal costs when a customer is injured by a product that your company manufactured or sold.

Hired and non-owned auto insurance. This policy pays for damages caused by vehicles that your company uses but does not own.

Liquor liability insurance. This policy protects businesses that sell or serve alcohol against damages caused by inebriated patrons.

Electronic data liability endorsement. This coverage can help protect your business from risks of lost or corrupted data caused by accidental physical damage to a customer’s computers or networks.

What's required of small businesses applying for general liability insurance?

When applying for general liability insurance, your business will need to provide your revenue, number of employees, and your claims history, along with other information.

Your company’s level of risk and whether or not it’s filed a claim in the past influence how easy it is to get a quote and the amount you’ll pay for a premium. Insureon can likely help your company find insurance, even if you have a history of filing claims or operate in a high-risk industry.

What other types of small business insurance can be required by law?

States usually require other types of commercial insurance. For example, most states require that businesses with employees carry workers’ compensation insurance. State laws also mandate how much commercial auto insurance coverage a business must purchase.

Get general liability quotes fast with Insureon

To receive free quotes for general liability insurance, fill out our easy online application. You can begin coverage in less than 24 hours.

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Updated: January 31, 2024

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