General liability insurance is the foundation of business protection. Whether you're a contractor meeting with clients, a retailer serving customers, or a consultant working on-site, GL insurance protects your business from the financial fallout of accidents, injuries, and lawsuits.
What Is General Liability Insurance?
General liability insurance covers your company against lawsuits, injuries, or property damage resulting from your operations. It helps pay for legal fees, settlements, and medical bills when unexpected incidents occur.
This coverage is essential for protecting your assets and ensuring your business can continue to operate, even when faced with a claim or legal challenge. If your business has any customer interactions, general liability insurance is a must-have.
What Does General Liability Cover?
GL insurance provides four main types of protection:
Property Damage
Covers damage caused to third-party property by your business activities. If your employee accidentally damages a client's equipment or your tools scratch a customer's floor, this coverage protects you from financial losses.
Bodily Injury Protection
Provides coverage for injuries sustained by customers or clients while on your business premises or as a result of your operations. This includes:
- Medical expenses
- Legal defense costs
- Compensation for pain and suffering
Example: A customer slips on a wet floor in your store and breaks their wrist. GL insurance covers their medical bills and any legal costs if they sue.
Legal Defense
Covers the cost of attorney fees, court costs, and other legal expenses related to lawsuits filed against your business—even if the claims are groundless.
Example: A former client accuses you of libel in a business dispute. Even if the claim is baseless, legal defense costs can average $35,000 or more. GL insurance covers these expenses.
Settlements and Judgments
Covers the costs of settlements or court judgments, providing financial protection from unexpected legal outcomes that could otherwise bankrupt a small business.
What General Liability Does NOT Cover
Understanding the limits of GL insurance is just as important as knowing what it covers:
| Not Covered | What You Need Instead |
|---|---|
| Employee injuries | Workers' compensation |
| Professional mistakes or bad advice | Professional liability (E&O) |
| Auto accidents during business use | Commercial auto insurance |
| Cyber breaches or data theft | Cyber liability insurance |
| Damage to your own property | Commercial property insurance |
| Product defects | Product liability insurance |
| Intentional acts | Not insurable |
Who Needs General Liability Insurance?
Almost every business benefits from GL coverage, but it's especially critical for:
- Small Business Owners: Any business interacting with customers, vendors, or the public
- Contractors and Tradespeople: Required by most clients and job sites
- Service Providers: Consultants, cleaners, landscapers, and others working on client premises
- Retail and Restaurant Owners: High foot traffic means higher injury risk
- Event Vendors: Venues and event organizers typically require proof of coverage
Many landlords, clients, and contracts require general liability insurance before you can sign a lease, start a project, or enter a venue.
How Much Coverage Do You Need?
Most small businesses carry standard limits of:
- $1 million per occurrence: Maximum payout for a single claim
- $2 million aggregate: Total coverage available during the policy period
Higher-risk industries—like construction, manufacturing, or hospitality—may need $5 million or more in coverage. Your coverage needs depend on:
- Your industry and associated risks
- Contract requirements from clients or landlords
- The value of assets you need to protect
- Your typical project size and scope
What Affects Your Premium?
Several factors determine what you'll pay for GL insurance:
| Factor | Impact |
|---|---|
| Industry | Construction and hospitality pay more than office-based consulting |
| Annual Revenue | Higher revenue generally means higher premiums |
| Location | Urban areas typically cost more than rural |
| Claims History | Previous claims can increase your rates |
| Coverage Limits | Higher limits mean higher premiums |
| Number of Employees | More employees can mean more exposure |
Getting Your Certificate of Insurance
A Certificate of Insurance (COI) is proof that you have active coverage. You'll need one to:
- Sign a commercial lease
- Start work on a client project
- Participate in trade shows or events
- Bid on contracts
- Satisfy vendor requirements
With the right insurance partner, you can receive your certificate immediately after binding your policy—no waiting days for paperwork.
Frequently Asked Questions
Is general liability insurance required by law?
While not always legally mandated, most landlords, clients, and contracts require it. It's also a requirement for certain business licenses and lease agreements. Even when not required, going without coverage puts your entire business at risk.
Can I add general liability to my existing policy?
Yes, GL coverage can often be added to an existing business insurance policy or bundled with other coverages like property insurance or workers' compensation. Bundling can streamline your coverage and reduce costs.
How is GL different from professional liability?
General liability covers physical injuries and property damage. Professional liability (also called Errors & Omissions) covers mistakes, negligence, or bad advice in your professional services. Many businesses need both.
What happens if I'm sued without insurance?
You pay everything out of pocket: attorney fees, court costs, settlements, and judgments. A single lawsuit can cost tens of thousands of dollars—or more—potentially bankrupting a small business.
Ready to protect your business? Harper can match you with the right general liability coverage and get you a certificate in minutes—not days.
