General liability insurance
General liability insurance
General liability insurance protects your business from the most common lawsuits brought by people outside your company. Many business owners are required to carry this policy.
Why do you need general liability insurance?
Any business that interacts with people outside the company should consider commercial general liability insurance (CGL). It’s often the first insurance coverage small business owners buy.
General liability insurance is a smart choice for any business owner, consultant, or contractor who works with the public, either directly or via online. The more contact you have with consumers, the greater your risk of lawsuits.
With this protection, you’re covered for lawsuits over slip-and-fall injuries, customer property damage, advertising injuries, and more. When you buy a general liability insurance policy, you have peace of mind that these lawsuits won’t derail your company – or your finances.
Your landlord or lender may require general liability insurance when you rent or buy an office. Client contracts may also require carrying this policy. Your clients, landlord, and lenders can have peace of mind knowing your business can handle the expense of legal action. It also gives you an edge over competitors that aren’t insured.
Small businesses that buy general liability insurance:
- Allow the public into their store or office
- Visit clients’ homes or businesses
- Handle clients’ property
- Rent or own a commercial space
- Sell products to customers
- Advertise their products or services
- Are active online or on social media
What does general liability insurance cover?
General liability insurance covers the cost of common lawsuits that could otherwise bankrupt your small business.
Specifically, this policy protects your business when someone outside your company sues over:
Bodily injury
If a customer suffers an injury at your business, the result could be a lawsuit. For example, if a customer experiences a slip-and-fall injury at your computer repair business and decides to sue you, general liability insurance would pay for medical bills and legal defense costs.
Property damage
Small businesses that handle customer property or work in clients’ homes are vulnerable to claims of property damage. For instance, if an employee at your cybersecurity company accidentally damages a person's property, such as their laptop, general liability insurance can cover the cost of a replacement and any legal costs if they sue.
Copyright infringement
Business structures, including limited liability companies (LLCs) and startups, that use images or music in their advertising could be sued for copyright infringement if they use someone else’s material. You may also be accused of stealing another company’s name or logo. So long as it’s accidental, this is covered by your general liability policy.
Defamation, such as libel or slander
From snarky social media posts to an unkind comment at a networking tech event, any company or freelancer that interacts with others is vulnerable to defamation claims. General liability insurance covers lawsuits related to both written defamation (libel) and spoken defamation (slander).
Product liability insurance
Most general liability policies include product liability insurance or the option to include it as an endorsement. This policy covers financial losses related to harm caused by a product, such as a customer who sues you after experiencing migraines after using a meditation app that your app development business created.
How much does general liability insurance cost?
TechInsurance customers pay an average of $42 per month for commercial general liability insurance coverage.
General liability costs are based on your:
- Type of business
- Business operations
- Location
- Number of employees
- Deductible
- The policy limits you choose
- Your claims history
Who should get general liability insurance coverage?
Because general liability insurance covers lawsuits from individuals outside your company, any business or sole proprietor that interacts with the public should consider this coverage.
This is true regardless of your type of business and its structure, as any individual or company could face a lawsuit. That includes IT consultants who visit client properties, home-based businesses that receive deliveries, and tech companies that work with clients in-person or digitally.
TechInsurance is a trusted insurance expert for small businesses, including contractors and consultants, with extensive knowledge of the IT sector.
Do independent contractors need general liability insurance?
Independent contractors face many of the same risks as small businesses. That’s why general liability insurance is still an important risk management strategy.
Even if you don’t see clients in person, you’re still at risk for a personal injury lawsuit. That’s when someone suffers from an injury or accident and blames your business.
That can happen as easily at a home office as a storefront, given that clients or vendors who visit your home could trip and fall on your stairs and sue you and your business.
Even saying the wrong thing on social media or in an email can lead to a lawsuit. But with general liability insurance in place, you can better protect yourself. There’s also a chance you can gain this protection without buying your own policy. Ask your client if they can add you to their general liability policy as an additional insured.
Read more about general liability insurance for independent contractors.
Is general liability insurance required by law?
General liability insurance is not required by law, but you might still be required to buy it.
For example, a landlord might require this coverage in the terms of a commercial lease. Clients might ask you to buy a general liability policy before they agree to work with your company. If you are looking to buy an office or other business property, lenders might require proof of coverage as well.
What isn't covered by general liability insurance
General liability insurance doesn’t cover every risk associated with running a business. Other business insurance policies cover different exposures, such as:
Mistakes and oversights
Errors and omissions insurance (E&O) can cover lawsuits over professional mistakes, coding errors and missed deadlines. It’s strongly recommended for any business that offers a professional service or advice, such as web designers or IT trainers. This type of coverage is sometimes referred to as professional liability insurance.
Employee injuries
Workers' compensation insurance covers medical expenses and disability benefits when an employee suffers a work-related injury or illness. For example, if an employee at an IT staffing agency is diagnosed with carpal tunnel syndrome due to constant typing, workers' comp would cover their medical bills.
Most states require workers' comp as soon as you hire your first employee.
Business property damage
A business owner's policy (BOP), which combines general liability insurance with commercial property insurance, protects computers, furniture, and other business property. It covers the cost of repairs or replacement if a storm damage your building or a thief steals valuable equipment. This package costs less than purchasing the policies separately.
Data breaches and cyberattacks
Cyber liability insurance helps your business recover from data breaches and cyberattacks. For example, if a data breach exposes sensitive client information at a real estate marketing agency, cyber insurance would cover the cost of notifying clients or supplying them with fraud monitoring services.
Third-party cyber liability insurance also covers legal costs if a client accuses your tech company for failing to prevent a data breach at their business.
Employee discrimination lawsuits
Employment practices liability insurance (EPLI) covers liability claims in which an employee alleges harassment, discrimination, wrongful termination, or another violation of worker rights. For example, if a female employee at a database administration sues for wrongful termination based on gender, EPLI would cover legal expenses.
Vehicles used by a business
Commercial auto insurance covers costs if your business vehicle is involved in an accident. Most states require this coverage for vehicles owned by a business. For leased, rented, and personal vehicles used for work, you should consider hired and non-owned auto insurance (HNOA).
Other common questions about general liability insurance
How do you get a certificate of insurance?
With TechInsurance, you can easily download a certificate of liability insurance, often on the same day you buy general liability or another insurance product.
This comes in handy for companies and consultants that need proof of insurance to sign a contract or a lease and don’t have time to call an insurance company for documentation. Clients and landlords may ask for a certificate of general liability insurance to show you’re insured.
How much general liability coverage do you need?
If you’re buying business liability insurance coverage to sign a lease, mortgage, or contract, check the fine print. It’ll likely tell you the amount of coverage your business needs.
Otherwise, take a look at your risks. A busy store will need higher coverage limits than a business that’s run from home. Your general liability insurance policy should cover enough to avoid paying out of pocket for legal defense costs, medical bills, and other expenses.
Nearly 90% of TechInsurance customers choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit.
If you’d like help figuring out what type of small business insurance you need and how much, talk to a TechInsurance insurance agent.
For more information about general liability insurance, visit our general liability FAQs page.