A General Liability Insurance Guide for Small Business

Many small business owners have to “wear a lot of hats,” playing a wide variety of roles and managing a number of responsibilities to keep their business running. When it comes to financially protecting that business, general liability insurance works in much the same way.

It’s important to find general liability coverage that best matches your unique risks, contract requirements, and budget—all without paying for coverage you don’t need. So, let’s get to know more about general liability coverage and see how valuable it can be for your business.

What is General Liability Insurance for Small Businesses?

General liability insurance is a way to help cover costs from third-party accidents, third-party property damage, and third-party bodily injuries. In most cases, when accidents happen as part of your business, you can be held financially responsible.

Let’s face it, accidents happen even to the best of us. And when it comes to business-related accidents, the costs can be hefty. Studies have shown that the average small business customer injury or damage claim is $30,000.

If you have general liability (GL) insurance, it can help cover those costs up to your policy’s limits. If you don’t, you or your business could very well be on the hook for thousands of dollars.

Are you legally required to have general liability insurance for a small business?

General liability coverage is usually not required by law, but many cities, states, industries, and commercial landlords have specific requirements. Those can include showing proof of GL coverage in order to obtain a contractor’s license or other professional certifications you may need for your business.

In addition, not having GL coverage can often be a nonstarter for many customers or companies you may want to work with.

What Does General Liability Insurance Cover for Small Businesses?

General liability insurance for small business may cover:

• Bodily injuries
• Third-party property damage
• Personal and advertising injuries
• Claims arising from product defects
• Medical expenses
• And more

To get a better sense of how general liability insurance can help cover your small business, here are a few examples:

Floored by claims

Let’s say you have a business cleaning homes. You just finished mopping the kitchen floor when the homeowner came in to grab a glass of water. Before you can warn her, she slips on the wet floor, falls, and hurts her back.

What follows is a trip to the hospital, eight weeks of physical therapy, and the bills for all of it.

Without general liability coverage, there’s a good chance you and your business would be responsible for paying those bills out-of-pocket. And that could put your operation’s flat on its back, and possibly even impact you and your family’s personal finances. A general liability policy, however, may help cover these costs up to the policy limits.

Taco trouble

Let’s meet Brandon, the owner of Brandon’s Burritos. In an online post, he jokes that Tammy’s Taco Truck probably serves expired food to cut down on costs.

The post spreads, and Tammy’s Taco Truck begins to lose business. Tammy suspects that Brandon’s social post resulted in customers bypassing her Taco Truck and sues him for the libelous comments. For Brandon, that could mean paying a libel claim, along with the legal fees to defend himself in court.

With general liability insurance, those costs could be covered up to Brandon’s policy’s limit.

While the idea of an accident claim or lawsuit may be overwhelming to think about, selecting coverage doesn’t have to be. At Simply Business, we help small business owners quickly and easily compare, buy, and manage general liability policies from top-rated providers.

How to Choose General Liability Coverage for Your Small Business

There is no single best general liability coverage for every small business. The best policy for you is the one that fits your day-to-day risks, offers limits you’re comfortable with, makes it easy to show proof of coverage, and stays within your budget.

When comparing your options, focus on these factors:

• Coverage fit: The policy should reflect the type of work you do. A consultant, a cleaner, and a contractor don’t face the same risks.
• Policy limits: Look for per-occurrence and aggregate limits that meet your contracts and comfort level.
• Exclusions: Know what isn’t covered so you aren’t surprised later.
• Proof of coverage: Fast, free access to a certificate of insurance helps you land jobs, sign contracts, and get licensed.
• Price and payment flexibility: Look for affordable rates and monthly payment options that fit your cash flow.

How Much is General Liability Insurance for a Small Business?

The average cost of $1 million in general liability coverage is $44.44 per month, based on general liability policies sold by Simply Business in the second half of 2025.

Here are the main factors that affect your cost:

• Industry and risk: Higher-risk businesses, like contractors, often pay more than lower-risk professional services.
• Revenue and payroll: More activity can mean more exposure.
• Location: State laws and local claim trends influence pricing.
• Claims history: Prior claims may increase premiums.
• Coverage limits and endorsements: Higher limits or added coverage typically cost more.

The cost for general liability coverage varies from business to business, based on your specific needs.

Here’s a look at some of the most common states we serve and the monthly¹ premiums customers paid for general liability insurance coverage:

STATE	MEDIAN MONTHLY COST (in USD)
California	$35.33
Colorado	$43.83
Florida	$47.00
Georgia	$41.67
Massachusetts	$42.58
New York	$31.75
North Carolina	$41.25
Ohio	$35.08
Pennsylvania	$41.25
South Carolina	$43.42
Texas	$43.08

¹Figures show the median (50th percentile) monthly premium for general liability policies sold by Simply Business in the identified states in the second half of 2025. Your actual price may vary based on your business type, revenue, and insurer, among other factors.

What Are the Risks of Not Having General Liability Insurance?

Without general liability insurance, your business could pay out of pocket for a customer injury, property damage, or lawsuit—costs that can run into the tens of thousands of dollars and, in some cases, force a small business to close.

General liability claims can happen to any small business. This coverage can help you recover from these incidents while protecting your livelihood. Even when it’s not required, the potentially devastating cost of an accident or a lawsuit makes it a smart policy to carry.

Do I Need General Liability and Workers’ Comp Insurance for My Small Business?

Along with general liability insurance, many small business owners ask about other types of coverage, such as workers’ compensation insurance. Here’s the difference between the two:

While general liability insurance protects your business, workers’ comp is designed to financially protect your employees (and in some cases, you) if they suffer a job-related illness or injury. Many states require workers comp if you have even one employee, and it can be an important layer of protection for your business. 

Want to learn more? You can find out more about workers comp insurance here.

How Do I find General Liability Coverage That Fits My Business?

Ultimately, the best general liability coverage for your small business is the one that fits your exact needs. Here’s a simple way to compare your options:

• Start with fit. Does the policy match where and how you work?
• Check the limits. Make sure the per-occurrence and aggregate limits meet your contracts.
• Review the exclusions. If something core to your business is excluded, that’s a problem.
• Test the certificate process. How quickly can you get proof of coverage?
• Weigh cost against coverage. The cheapest option isn’t always the best. Look at what you’re getting, not just what you’re paying.

It may sound complicated, but Simply Business makes this part easy. We’re not an insurance provider—we’re your insurance partner, with a platform that lets you quickly and easily compare, buy, and manage policies from top providers. 

Take less than ten minutes to answer a few questions to get a free quote online, and decide on the coverage that’s right for you. Or talk with one of our friendly pros at 844-654-7272, Monday–Friday, 8am–8pm (ET).

Frequently Asked Questions