What Is a General Liability Insurance Policy? Baseline Protection for Your Business

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General liability insurance (GLI) is business coverage that safeguards your business in the event it is accused of causing injury or damage to an individual or their property, as well as claims involving advertising injury like defamation. Businesses are not always required to have general liability insurance but having this baseline protection is strongly recommended.

Keep reading to see how general liability works and what it costs.

Key Takeaways

  • General liability insurance primarily protects against claims involving a customer or client accusing you of causing them physical injury, breaking their property or slandering them.
  • Examples of general liability insurance claims may include a customer slipping and falling inside your store or one of your employees breaking an expensive vase at a client’s house.
  • Some insurance companies charge around $30 per month for general liability insurance but actual rates can vary based on the insurance, business size, annual revenue, industry, location and more.
  • There is no universal requirement for all businesses in the U.S. to carry general liability insurance, though there may be exceptions based on industry and which clients or customers you serve.
  • General liability insurance will not cover your physical assets, company vehicles, employee injuries or illnesses and some types of professional service errors.

How Does General Liability Insurance Work?

General liability insurance (GLI), also called commercial liability insurance, provides financial protection for your business in the event it is accused of causing bodily injury or property damage. Your business should also receive coverage for personal injury claims if your business is accused of defamation, libel, slander or copyright infringement. Once a claim has been filed, your GLI policy will offer you financial compensation up to your plan’s limits.

A general liability insurance policy typically includes both per-occurrence and aggregate limits. The per-occurrence limit is the maximum amount the insurance company will pay for a single claim or incident. In contrast, the aggregate limit is the maximum amount the insurer will pay over the policy period, typically one year, for all claims combined. Once the aggregate limit is reached, the policy no longer provides coverage, even if there are additional claims within the policy period.

What Does General Liability Insurance Cover?

We've provided a simple breakdown, highlighting what general liability insurance mainly covers:




Bodily Injury

Your business is held responsible for an injury a customer or client suffers.

You’re pressure washing your client’s business entry walkway and the client slips on the wet ground.

Property Damage

Your business is legally liable for damaging a customer’s or client’s property.

Your landscaping business is trimming a client’s tree branches but the branch falls on the client’s roof.

Personal and Advertising Injury

Your business is held responsible for attacking another party’s reputation.

Your most recent marketing campaign criticizes your competitor’s integrity and they sue you for slander.

Copyright Infringement

Your business accidentally uses copyrighted material owned by a third party.

You posted a series of online videos promoting your company using licensed music without permission.

Other types of coverages that business owners may enjoy in their general liability policy may include:[1]

  • Electronic data liability: Covers damage caused to a client’s electronic information such as their personal and financial information.
  • Defense costs: Covers the costs associated with any legal fees that may arise should a client choose to sue you for damages related to any of the above losses.
  • Worldwide coverage: Some insurance companies cover claims that occur anywhere in the world that are brought against you or your company.

What Isn’t Covered?

General liability insurance will not cover the following situations:

  • Commercial auto accidents caused by you or your employees while driving for work
  • Employee injuries or illnesses caused by work
  • Damage to your business property
  • Mistakes or errors caused by professional services
  • Expenses on claims that exceed your liability limits
  • Purposeful acts of wrongdoing done by you or your employees

How Much Does General Liability Insurance Cost?

Business insurance carrier Hiscox surveyed business owners and found that the typical monthly cost for general liability insurance is around $30. It's noted that approximately 95% of small businesses spend under $50 each month for this insurance, while a mere 1% exceed $100 in monthly payments.[2] The price of a general liability insurance plan varies based on multiple elements, including:

  • Insurance company
  • General liability class code (a rating by an insurance company based on your business's risk exposure)
  • Annual revenue
  • Business location
  • Industry
  • Business size

Keep in mind that you can purchase a general liability plan as a standalone policy or have it bundled in business owners policy (BOP). Liberty Mutual customers paid $85 on average for a BOP.[3] BOPs also include business property insurance and possibly business interruption insurance.

Below is a table breaking down what a general liability insurance policy for a business consulting firm might cost:[2]


Business Consultant



Annual Payroll


Per Occurrence Limit


Aggregate Limit




Monthly Premium


Annual Premium


Data gathered from Hiscox.

Is General Liability Insurance Required?

There are typically no state requirements to carry general liability insurance but it may be necessary in certain industries. Bidding for certain government contracts, for example, may require you to show proof of general liability insurance.[4]

General liability insurance for small business owners is strongly recommended even if their industry or state does not require it.

If you are sued by someone because of your actions or the actions of an employee and they win, you may be out thousands of dollars.

Who Is General Liability Insurance Best For?

General liability insurance is recomended for small businesses and large businesses across all industries. Below are some examples of industries in which GLI could be beneficial:

  • Any business owner
  • Landscaping
  • General contracting
  • Real estate
  • Consulting
  • Marketing
  • Janitorial
  • Artist
  • IT services
  • Retail

What Are the Risks if I Don’t Have General Liability Coverage for My Business?

Not having business general liability insurance coverage for your business can lead to several significant risks, such as being financially responsible for any damages or injuries your business causes, which can be substantial and potentially bankrupting.

Without GLI, legal fees and settlements from lawsuits related to property damage, bodily injuries or advertising injuries must be paid out of pocket. A slip-and-fall case alone can cost as high as $35,000 and if it goes to court, you could be looking at $75,000 or more in defense and settlement costs.[5] This financial burden can be particularly heavy for small or medium-sized businesses.

In addition, lacking business liability insurance may limit your business opportunities, as clients and landlords may require proof of insurance before engaging in contracts. Lastly, operating without this coverage can harm your business's reputation, as it may be perceived as irresponsible or unprofessional by customers and partners.

How Much General Liability Coverage Does My Small Business Need?

Determining the amount of general liability insurance you need depends on several factors specific to your business. Here are key considerations to help you decide:

  • Nature of your business: The level of risk associated with your business plays a significant role. If your business activities have a higher potential for causing bodily injury or property damage (e.g., construction, manufacturing), you may need higher coverage limits.
  • Business size and location: Larger businesses or those in areas with higher legal claims or settlement costs might require more coverage.
  • Contract requirements: If you are working under contracts, clients might specify minimum insurance requirements.
  • Assets at risk: More assets often mean higher risks and the need for greater coverage.
  • Industry standards: Looking at insurance coverage amounts in your industry can give you a benchmark for what's considered adequate.
  • Potential legal costs: Legal defense costs can be substantial. Ensure your policy limit is sufficient to cover potential legal fees and settlements.
  • Previous claims history: Businesses with a high claims history may want to opt for higher coverage to safeguard against future incidents.

If you feel you need higher limits, you can purchase an additional commercial umbrella policy.

What Other Types of Liability Insurance Are There?

GLI policies provide several types of liability coverage that most businesses could use but there are types of specialized coverage worth considering:

  • Professional liability insurance: Helps cover you and your company if you make a mistake while providing services for a client.
  • Employment practices liability insurance: Covers your legal defense costs as well as settlements or judgments if you’re sued for wrongful termination, employment-related harassment or discrimination by a current or former employee.
  • Management liability insurance: Protects against exposures faced by directors, managers and officers of your business.
  • Commercial auto insurance: Provides liability coverage for business vehicles and can also protect your employees if they are injured.
  • Commercial umbrella insurance: Increases the limits of your existing liability coverage so you can cover expensive claims.

How To Get General Liability Insurance for Your Small Business

As you look for insurance, aim to obtain a minimum of three to five different quotes from various insurers. These companies will need details about your business, including its sector, geographical area, yearly income and employee count. This data gathering can be quite laborious when done for multiple insurers.

To simplify this procedure, consider utilizing an insurance marketplace such as SmartFinancial. By completing a single questionnaire regarding your insurance requirements and financial constraints, you can expedite the process. This approach can quickly connect you with a tailored commercial insurance plan. Don't hesitate to contact an agent to discuss your complimentary commercial insurance quote now.

Get General Liability Insurance for Your Business Today


What is the difference between general liability and personal liability insurance?

General liability insurance provides coverage for businesses against claims of bodily injury, property damage and advertising injury. In contrast, personal liability insurance is included in a homeowners or renters insurance policy and protects the household members against claims of bodily injury or property damage.

Is management liability insurance the same as general liability insurance?

Management liability insurance protects against risk exposures specifically faced by directors, managers and officers of your business. General liability insurance typically provides coverage when anybody at the company can be held for another party’s losses.

What’s the difference between general liability insurance and full coverage insurance?

General liability insurance protects you and your business from damages caused by you against a client. Full coverage is a personal automotive policy that usually includes collision, comprehensive, property damage liability and bodily injury liability coverage.

Does general liability cover theft?

No, general liability insurance does not cover your property if it is stolen but this is usually covered under a commercial property insurance policy.

Is general liability insurance tax deductible?

General liability insurance can be tax deductible as a qualified business expense.[6]


  1. Hiscox. “General Liability Insurance.” Accessed Jan. 24, 2024.
  2. Hiscox. “General Liability Insurance Cost.” Accessed Jan. 24, 2024. 
  3. The Hartford. “Business Owners Policy.” Accessed Jan. 24, 2024.
  4. Office of Business and Acquisition Services. “General Insurance Requirements for DGS Service Contracts.” Accessed Jan. 24, 2024.
  5. The Hartford. “What Is General Liability Insurance?” Accessed Jan. 25, 2024.
  6. Internal Revenue Service. “Publication 535.” Accessed Jan. 24, 2024.

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