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General Liability Insurance

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What is general liability insurance?

General liability insurance helps the small business owner cover the costs of claims made against their business when there is bodily injury or property damage on their business premises, or while employees engage in their work duties. Those costs can include legal defense, judgment, or settlement. Learn more about general liability. 

Who Needs General Liability Insurance?

In short, just about every small business benefits from having general liability insurance. In fact, it’s the most common commercial insurance purchase. It’s such a common business insurance coverage, that many people simply think of a general liability policy as “business insurance.”

If you rent or lease an office or commercial space, your landlord may require this coverage. Additionally, if your business is engaging clients through contracts, general liability may be a requirement to close the deal.

As a rule of thumb, if your small business interacts with or is open to the public, commercial general liability insurance is a good idea. It’s the foundation of your small business insurance protection. General liability may help protect your business from the financial consequences of being sued by an injured customer, or others you may accidentally harm.

Need General Liability Insurance

How to Know if You Need General Liability?

Here are some things to consider if you’re unsure if you need general liability insurance:

  • Is your business open to the public?
  • Is your office or facility frequently visited by customers or clients?
  • Do you work with customers at a job site?
  • Do you visit customers or clients at an office?
  • Does your business handle client property?
  • Do you lease facilities or offices?
  • Do you advertise or market your business?

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What Does General Liability Cover?

A general liability policy extends a very specific form of protection to small businesses. Its purpose is to provide protection for commercial liabilities your business may incur under its normal operation.

In general, this form of coverage is for lawsuits and damages claims by third parties for bodily injury and property damage. It also provides for advertising injuries your business may incur or claims against your business by competitors. Included in this coverage is your legal defense should a claim for damage require legal representation.

Pro-Tip: If your business is engaged in professional services (eg. accounting, engineering, legal services), your consultations and professional advice are not covered by a general liability policy. You may need a professional liability policy for protection against errors and omissions.

Read more about what general liability insurance covers.

General Liability Insurance vs. BOP

Some business owners consider purchasing general liability insurance as a standalone policy. This might be the right choice for your business. However,  for most small businesses, general liability alone isn’t enough. It won’t protect your business property.

If your business owns real estate, equipment, or inventory, a BOP is the smarter choice—providing your business with both liability and property protection in one convenient package.

Not sure which is right for you? Learn about the differences between a Business Owner’s Policy and General Liability.

How Do I Buy General Liability Insurance?

Buying business insurance, like general liability, is a complex business transaction. There are several questions you should ask before you buy business insurance. Because of this, general liability insurance is typically purchased through an insurance agent. However, if you plan to buy business insurance online, you should be prepared to compare business insurance quotes to help get the best coverage and price.

In fact, you can start a free online business quote right now. However, before you begin, you’ll need a few basic facts about your business. Please have the following:

  • Business name
  • The type of business (eg. LLC, Corporation, Sole Proprietor)
  • The year the business was started
  • Your business operations (eg. accounting, contractor)
  • Total annual revenues
  • Number of full & part-time employees

You can also purchase general liability as a stand-alone coverage or as part of a business owner’s policy.

General Liability Insurance Cost

How Much Does a General Liability Policy Cost?

General liability insurance costs vary depending on your industry and the coverage amount you request. For example, if your business is construction, your premiums may be higher than an accounting firm. In reality, the cost of general liability coverage is influenced by a number of things, including:

  • The limit your request
  • Exposure to risk
  • Location of business
  • Number of employees
  • Business annual revenues
  • Number of employees
  • Claims history

Many sites will provide you with average costs. That may not reflect accurately what you will pay. The best way to know the cost is to get a quote.

How Will I Get Proof of Insurance?

For many businesses, you will need some form of proof of general liability insurance. This is typically done with a “certificate of insurance.”

When you purchase a business insurance policy from IronPoint, you can get a certificate of insurance on the day of issuance with most of our carriers. That’s because we are authorized agents for our partner carriers, and don’t use intermediaries to access business insurance carriers or products

From time to time, or if we need to access the excess and surplus lines markets for your general liability insurance, it may take a few days.

ProTip: If timing is important to you before you elect to purchase general liability coverage from an insurance agent, ask them if they have direct access to the insurance carrier, and if they can provide you with a certificate on the same day of policy issuance. If the agent is accessing the carrier through an intermediary, like a Managing General Agent, they may have delays in getting you evidence of insurance.

General Liability for Independent Contractors

As the “gig economy” continues to explode, there are more independent contractors asking about general liability insurance. If you’re a freelancer, you may be asking, do freelancers need business insurance?

Here’s the thing, if you’re a freelancer or independent contractor, your insurance requirements are generally the same as more formal small business organizations. You can be sued or held liable for property damages, or injuries caused to others too.

Frequently, freelancers and independent contractors frequently run their businesses from a home office. This means you may not need a business owner’s policy or commercial property insurance. However, freelancers may still benefit from a general liability policy or professional liability insurance.

Additional Coverage to Consider

If you are concerned about the risk your business undertakes or you have large revenues at risk, you can increase or extend your liability coverage with commercial umbrella insurance. An umbrella insurance policy will increase the liability limit, essentially providing your business with greater coverage for more expensive lawsuits or larger damages claims.

While many smaller businesses can get by only purchasing general liability, chances are, your business is more complex and has exposure to greater risks than those covered with a  general liability policy.

If you have more exposures risks other than liability, you can get additional protection with the following coverages:

  • Commercial property insurance covers your business property. When bundled with general liability, it’s known as a business owner’s policy (BOP). And it’s usually available for a discount.
  • Cyber liability insurance protects against cyberattacks and data breaches. It’s an important policy for businesses that handle credit cards and other sensitive customer information.
  • Product liability insurance can help pay for lawsuits if a product you made or sold injures a customer or damages their property.
  • Hired and non-owned auto insurance covers vehicles used but not owned by your business.
  • Liquor liability insurance protects against risks associated with serving alcohol. It’s usually required for a liquor license.

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GL Coverage FAQs?

Is general liability coverage required by law?

No, but failing to carry general liability coverage could result in you having to pay for all the expenses related to a claim against your business. For example, while visiting your office a client slips on a rug and breaks their hip. Without general liability protection, you could be solely responsible for all the medical bills and legal fees. So, even though it’s not required by law, it should be a priority for your business.

Does general liability coverage have a deductible?

Sometimes. If you elect a policy with a deductible, you choose the amount of your general liability deductible when you get an insurance quote. A deductible is a fixed out-of-pocket expense you agree to pay before your coverage starts to pay.

Does general liability cover theft?

General liability insurance only pays for third-party damages, not yours. You’re considered the “first party”. The “third party” is the one that has a claim against you. This means general liability won’t cover your property or equipment against theft or damage.

To protect your property, we offer mono-line commercial property coverage or you can add this coverage as a part of a Business Owners Policy.

Is a general liability premium tax deductible?

Yes. Since general liability premiums are considered “a cost of doing business”, they usually can be written off at tax time. That said, it’s a good idea to consult a tax professional to make sure.

Does general liability cover professional mistakes?

No. General liability only provides coverage for claims against you by others for their bodily injuries or damage to their property. To protect yourself from claims against you for professional neglect, omissions, or mistakes, you need to have professional liability insurance.

What to learn more? Check out our post on the differences between general liability and professional liability.

What is a certificate of insurance?

A certificate of insurance (COI) is an official document that lists all coverages and limits on an insurance policy. Essentially, it proves that you have insurance and details your policy coverages and limits.