General Liability Insurance

Protect What You’ve Worked Hard to Build

In any business, accidents can happen. The most risk averse among us can still slip and fall, drop a hammer through a window, or worse yet, face an unexpected lawsuit. Repairing the damage done in any scenario can become costly – very quickly.

That’s where general liability insurance can help the most. Being armed with coverage that helps protect against unexpected expenses can go a long way toward helping you feel more at ease. Peace of mind means a lot, especially when you’re running a small business.

What is General Liability Insurance?

General liability insurance can help cover costs from third-party accidents, third-party property damage, and bodily injury. In essence, without this type of coverage, your business may be responsible for the above-mentioned costs – and they can become catastrophically high.

With general liability protection, however, you don’t have to worry. Your policy can help cover the costs of a claim — including resulting legal fees — up to your policy limit.

Inside Insurance Tip: General liability insurance (GL) is sometimes called Commercial General Liability insurance or Business Liability insurance.

We explain other business insurance terms in our helpful glossary.

What does General Liability Insurance cover?

In a broad sense, general liability insurance usually can cover the costs from third-party accidents, third-party property damage, and bodily injury. But what does that really mean? We’ve broken it down below:

• Coverage for third-party property damage claims.

  General liability insurance protects you against unintentional damages you might cause in the normal operation of your business on a client’s property.

• Coverage for third-party accidents.

  General liability insurance coverage can provide your business with protection against a claim resulting from damage to property, accidents, and bodily injury. This insurance policy helps protect you and your business when third parties (usually customers or vendors) are injured on your commercial property.

• Coverage for personal or advertising injury claims.

  General liability insurance coverage can protect against claims of personal or advertising injury. These can include claims of stolen ideas, invasion of privacy, libel, slander, and copyright infringement related to advertising.

• Coverage for claims about faulty products.

  If your business accidentally manufactures a product that has a defect that injures someone, your policy could help cover costs arising from that claim. This part of general liability insurance – known more specifically as product liability insurance – can typically be added to a GL policy if the carrier offers it for small business owners who make and sell products, especially in e-commerce stores.

• Coverage for protecting your important tools and equipment.

  In some cases, general liability insurance can help cover the cost of replacing or repairing your business tools and equipment if they’re lost or stolen. This is known as contents coverage, and it can usually be added to your general liability policy.

There are limitations to this coverage, however, and it’s important to be aware of them. General liability insurance usually does not cover:

• Damage to your own property
• Damage to a customer's personal property stored in your care, custody, and control
• Professional services
• Workers compensation or injury to your employees
• Damage to your work
• Auto liability
• Expected or intentional injury or damage
• And more

Looking for more information about other types of coverage? Take a look in our Resource Center for more information.

Why should I have General Liability Insurance?

No matter what kind of business you have, it’s impossible to predict the circumstances that a general liability insurance policy can help protect you against.

Any professional involvement with another person comes with inherent risks. If you find yourself interacting with clients in any way, we typically recommend getting a general liability insurance policy. This business insurance can also typically help cover your employee or employees if they cause damage.

Other General Liability FAQs

Whether you're new to buying business insurance or you're a seasoned pro, here are the answers to some commonly asked questions about GL insurance. You can also check out our general liability insurance FAQs.

• How Does General Liability Coverage Work?

  Let’s take a look at an example of how a general liability insurance policy works in action.

  A plumber is doing light repairs on pipes in a client’s remodeled bathroom. However, he doesn’t secure the caps as tightly as he should have, which causes considerable water damage in the new bathroom.

  The plumber’s general liability insurance policy covers the $7,500 cost of repairing the water damage. The only out-of-pocket expense the plumber has to pay is the policy deductible.

  Without this protection, the plumber would have had to pay the entire $7,500 out of pocket, plus any legal fees if the customer decided to sue for more damages.

  Essentially, general liability insurance makes it possible for your business to survive business-related accidents or lawsuits.

• Is General Liability Coverage Required By Law?

  Commercial liability insurance is not required by federal law, but most cities and states have their own legal requirements for business owners who work with the public. For example, if you’re a contractor and you’re applying for a license, most states will require you to provide proof of GL coverage before you can get licensed.

  Regardless of your state’s requirements around general liability insurance, it’s a good idea to take out this policy. Most customers won’t work with you unless you have it, and some vendors won’t allow you on their property without proof of coverage.

• Why is General Liability Coverage Important?

  Commercial general liability insurance is critical for businesses that deal with the public. It gives you the peace of mind you need to focus on your business, plus, it can make customers more confident about working with you.

  Accidents happen, even when you try to do everything right. General liability insurance means that if the worst happens, you and your family won’t be held financially responsible for any resulting lawsuits, medical costs, and property damage.

• Is General Liability Insurance Tax-Deductible?

  Typically, your general liability insurance costs are income- tax-deductible. That’s because the IRS considers your policy premium as part of your business costs, which are deductible. However, you should get advice from a tax preparer or an accountant if you’d like to learn more about deducting your insurance premiums from your business’s taxes.

• How Much Does a General Liability Policy Cost?

  General liability cost is largely determined by the type of work you do, the kinds of risks you're exposed to, and the number of employees you have on your payroll (see next section for more details).

  Some other factors can include where your business is located, how many years of experience you have, and the financial stability of your operation.

  Here at Simply Business, we specialize in helping small business owners find general liability insurance that's as affordable as it is comprehensive. We can help you find and select GL policies for as low as $22.50 per month, meaning you don't need to break the bank to get coverage for your business.*

  To see how much you could pay for general liability insurance coverage, just answer a few questions on our quote form and start comparing policies from the nation's top insurers. Once you find one you like, you can select it and buy 100% online or over your phone.

• Is General Liability Insurance Based on Payroll?

  The number of employees you have in your company can play a role in how much you pay for your coverage.

  Think about it this way: The more employees you have, the greater the likelihood that they may cause damage in your office or on a customer’s property.

  Even the best small business owner can’t control risks that come with having employees on the job. Your employee may accidentally damage a customer’s property or say something about a client that results in legal action. These common scenarios happen a lot more than you think, and without general liability protection, you could end up leaving your business and your family vulnerable.

*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - March 2023 data of 10% of our total policies sold.

This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.