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What is General Liability Insurance?

Protecting Your Small Business from the Unexpected

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Understanding General Liability

As a business owner, you have enough to worry about without having to stress about unexpected costs arising from legal issues. This is where general liability insurance comes in. General liability insurance is a type of insurance policy that protects your business from the costs of lawsuits and other legal issues that may arise from your day-to-day operations.

What does general liability cover?

General liability insurance covers a range of legal issues that may arise in your business, including:

  • Bodily injury: If someone is hurt on your property or as a result of your operations, general liability insurance will cover the costs of their medical expenses.
  • Property damage: If you or one of your employees causes damage to someone else’s property, general liability insurance will cover the costs of repairs or replacement.
  • Advertising injury: If your business is accused of copyright infringement, defamation, or similar issues arising from your advertising efforts, general liability insurance will cover the costs of defense and any resulting damages.

General liability does not provide coverage for professional errors or omissions. Those liabilities are covered by a professional liability policy (also known as errors & commission).

Why do I need general liability insurance?

As a business owner, you face a range of potential legal issues every day. From slip-and-fall accidents to disputes over advertising, you never know when you might need to defend yourself in court. Without general liability insurance, these legal issues can quickly become very expensive, potentially putting your business at risk.

General liability insurance is a smart investment for any business owner. It gives you peace of mind knowing that you’re protected from the costs of legal issues, no matter what challenges may arise. And if you’re ever sued, your insurance will cover the costs of defense and any resulting damages, so you can focus on running your business.


Consider a small business owner named Sarah who runs a local restaurant. One day, a customer slips and falls on a wet floor in the restaurant, injuring themselves. The customer decides to sue Sarah’s business, seeking compensation for their medical expenses.

Without general liability insurance, Sarah would have to pay for her own legal defense and any resulting damages. But with general liability insurance, her insurance policy will cover the costs of her defense and any damages she may be ordered to pay. This protection allows Sarah to focus on running her business, without worrying about the financial consequences of the lawsuit.

In what other ways does general liability help?

General Liability can help small businesses with various transactions, as well as provide financial protection for your small business. Here are a few ways general liability helps support your business:

  • Sign contracts with new clients.
  • Afford the cost of a lawsuit.
  • Avoid bankruptcy.
  • Acquire professional licenses.
  • Rent a professional office space.

How does it do all these things? Well, for starters it offers financial security because you’ll know that one lawsuit won’t take down your business.

But more than that, General Liability is also important simply because clients, local governments, and landlords might require you to have it. For instance, in order to get an electrician’s license, a contractor might have to meet state requirements for Commercial General Liability Insurance.

What Kinds Of Businesses Need Liability Insurance?

General Liability Insurance is extremely common because many business owners need it to protect their companies and sign important contracts. When businesses sign contracts with each other, they will often include a clause in the contract that requires the other party to have General Liability Insurance.


Because most business owners do one of more of the following:

  • Interact with clients/customers on their premises.
  • Have a store or building that’s open to the public.
  • Interact with people on a job site.
  • Handle client property.
  • Rent business space.
  • Sell products to customers.
  • Advertise or market their businesses.
  • Use social media / have an Internet presence.

General Liability protects you from the things that can go wrong when you engage in any of the above activities.

What Can I Do To Save Money On General Liability?

There are two ways to get lower premiums on General Liability:

This second option is only available to small businesses and is called a Business Owner’s Policy. Many small-business owners are quick to take advantage of the cost savings a BOP offers on two important insurance coverages.

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