Understanding general liability insurance
General liability can be a foundation for many small businesses, but it is not all-purpose protection.
What does general liability typically address?
Certain claims involving bodily injury to others, damage to someone else’s property, and specified personal or advertising injuries. Defense costs may also be covered for eligible claims.
Why might a business need it?
A visitor trips at your office, a contractor damages a customer’s property, or a client alleges an advertising-related injury. These situations can create costly disputes even for careful businesses.
What is usually outside its scope?
Employee injuries, professional advice errors, auto accidents, cyber incidents, and damage to your own property typically require different coverage. Exclusions vary.
What should you review?
Limits per occurrence and in aggregate, contractual insurance obligations, requests to add landlords or customers to the policy, deductibles, and how the policy defines covered operations.
Frequently asked questions
Does an LLC replace the need for liability insurance?
No. An LLC may help separate certain personal and business liabilities, but it does not pay claims or legal defense costs.
Is general liability legally required for every business?
Not universally. Requirements can arise from contracts, landlords, customers, licensing rules, or particular operations.
Example: a visitor is injured
A customer trips over a display and seeks medical costs. General liability may address an eligible injury claim connected with covered operations. The insurer investigates the facts and applies the contract. A client who says your advice caused financial harm may involve professional liability instead.
Review limits and contract requests
Ask about per-claim and total policy limits, deductibles, defense costs, completed work, and exclusions for your trade. A lease may request that another party be added to the policy; this usually requires a policy change called an endorsement. A certificate of insurance summarizes the policy but does not change it. Share contract wording early so the insurer can confirm what is available.