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), also simply called liability insurance. 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 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.
It should be noted that traditional homeowners insurance will generally not cover accidents or incidents related to business operations.
Copyright infringement
Different 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 your restaurant over an allergic reaction to an ingredient.
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 and premium
- The policy limits you choose
- Your claims history
Hear from customers like you who purchased general liability coverage.
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 SaaS 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.
Does my LLC need general liability insurance?
Yes, you'll still need a general liability insurance policy to protect your small business from third-party injuries, damages, and other liabilities. While a limited liability company (LLC) can protect your personal assets, it alone will not fully protect your business against claims and lawsuits.
LLCs can be exceptionally vulnerable to lawsuits because they tend to be smaller and have fewer assets to fight litigation. This makes general liability insurance an important choice for many small business owners.
Top professions that would benefit from general liability insurance
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.
Read more about the differences between general liability and errors and omissions 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) combines general liability insurance with commercial property insurance to protect computers, furniture, and other business property. This package costs less than purchasing the policies separately.
A BOP covers the cost of repairs or replacement if a storm damages your building or a thief steals valuable equipment. For example, it would help pay to replace servers destroyed by a fire at a data center, though you'd need to add electronic data liability coverage to cover the lost data.
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 or credit card data is stolen from a clothing store, 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 an 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).
Business owner’s policy (BOP)
Workers' compensation insurance
Errors and omissions insurance
Cyber liability insurance
Commercial auto insurance
Other frequently asked questions about general liability insurance
What's the difference between general liability vs. professional liability insurance?
General liability provides coverage for injuries to customers or clients, third-party property damage, and advertising injuries. Professional liability, on the other hand, covers disputes over the quality of professional services provided.
Most businesses need general liability insurance, but any business that offers professional services may need added protection for mistakes and unhappy clients. That’s where professional liability coverage comes in.
Professional liability, also referred to as errors and omissions (E&O) insurance, helps professionals such as accountants, business consultants, and lawyers avoid the high costs of lawsuits and other legal fees related to the quality of their work.
For some industries, general liability insurance will not provide coverage against libel, slander, or other advertising injuries. These businesses would instead need media liability insurance, which is a form of professional liability coverage.
Read more about the difference between general liability and professional 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 work in a high-risk industry, you may want to consider a commercial umbrella policy to help navigate exceptionally expensive lawsuits or claims.
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.
What are common exclusions from general liability insurance?
Insurance providers will often include exclusions based on situations or incidents they won't cover. Some exclusions are within the policyholder's control, and some are not.
Common policy exclusions include:
- Illegal activity: If you engage in activity that violates local or federal law.
- Catastrophic events: This includes destruction from war or "acts of God" including natural disasters like floods and earthquakes.
- Intentional damage: Policies generally won't cover intentional acts that cause the claim.
- Lack of maintenance or avoidable damage: If you wind up with a claim because you or your employees failed to do routine maintenance or perform the due diligence necessary to prevent damage, the insurance company may deny the claim.
Your policy's exclusions will be outlined in the policy before you sign it.
What are coverage types A, B, and C for general liability insurance?
Coverages A, B, and C refer to the types of coverage included in a general liability policy.
- Coverage A refers to third-party bodily injury and property damage, such as if a customer slips on a spill at the business and needs to be hospitalized.
- Coverage B refers to personal and advertising injuries, including things like slander, libel, and defamation.
- Coverage C refers to medical payments and expenses related to injuries from customers and third parties while on the premises, even if the company isn't at fault.
The standard general liability insurance policy includes all three coverage types. However, there is variation based on industries and how different insurance companies handle their underwriting. Be sure to fully read your contract before signing, or speak to a licensed insurance agent.