General Liability Insurance
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General Liability Insurance

The minute you start selling your IT services, you become a business. As such, you open yourself to certain liability exposures you wouldn't have as an individual. General Liability Insurance can help ensure that these exposures don't lead to serious financial losses for you or your business.

What Is General Liability Insurance?

Let’s start with the basics: Commercial General Liability Insurance is the first policy most IT businesses buy. (FYI, your second policy will probably be Professional Liability Insurance.)

It usually costs between $500 and $900 per year and can cover legal expenses when you’re sued over customer injuries, client property damage, or slander. If you know you need business insurance but you’re not sure which policy, there’s a good chance it’s General Liability Insurance.

Of course, there’s a lot more to the General Liability Insurance story. Now that we’ve covered the basics, let’s get into the nitty gritty.

What Does General Liability Insurance Cover?

It’s easiest to understand what General Liability Insurance covers by comparing it to Professional Liability Insurance. As its name suggests, General Liability offers protection for the “general” things that can go wrong at your business – that is, the things that can go wrong at any business. If someone slips and falls on your floor, that’s a general liability exposure that could be covered under your policy.

On the other hand, Professional Liability Insurance covers lawsuits over your professional work: glitches, code errors, and delays in your projects. If your client is mad because you missed a deadline, Professional Liability Insurance can likely help.

General Liability Insurance doesn’t cover work-related issues, but it does cover many common accident, injury, and property damage lawsuits.

Learn more about General Liability coverage.

3 Examples of General Liability Insurance Coverage in Action

General Liability Insurance offers protection when people other than your employees get hurt or have their property damaged on your premises. For example:

A visiting client trips over a power cord and breaks her wrist (covered).

You tweet about how annoying it was to work with a client. The client sees the tweet, knows it’s about him, and sues you for defamation (covered).

While using dry-erase markers as props to show a client how cloud backup works, you knock over the CFO’s coffee – which ruins her laptop. She sues for the cost of replacing it (covered).

Sure, imagining all these scenarios is dark. But that’s how insurance companies think. They imagine the worst and help you plan for it.

Let’s say the first scenario happens. A client trips over your laptop cord and shatters her wrist. It's an accident, but she sues you. If that happens, General Liability Insurance can cover your legal expenses, paying for…

  • Lawyers’ fees.
  • The damages you owe the client.
  • The client’s medical bills.
  • Other lawsuit costs.

That’s how GL works. It picks up the tab for a covered claim over injury, property damage, or slander and makes sure your business isn’t scuttled by a lawsuit or random accident.

Do You Really Need General Liability Insurance?

We’re a business insurance company, so naturally we think every business should have General Liability Insurance. But it’s not just us.

The Small Business Administration strongly recommends it, and your contractors, clients, and landlords will probably require you to have General Liability Insurance at some point.

Translation: you’re in danger of missing out on a contract if you can't get covered in time to sign on the dotted line. And that's especially true for contracts with big clients.

As your company grows, it becomes more and more likely that bigger clients will require you to have business insurance. To prepare you for that possibility, let’s take a closer look at when and how these insurance requirements come up.

Why Do IT Businesses Buy General Liability Insurance?

Why do clients, landlords, and third parties want you to have General Liability Insurance coverage?

First, there’s the big-picture reason. As part of their risk management strategy, clients want to work with tech vendors who are financially stable and take measures to protect their company. It’s the same reason you’d want a delivery driver to have car insurance. You want to know he’s legit.

In addition, there are a few tech-specific scenarios that General Liability Insurance can help with…

  • You’re moving your startup from your garage to an actual office. You’re keeping the ping pong table, but your new landlord won’t sign the lease until you have liability insurance.
  • You work from a home office, but your Homeowner's policy doesn't cover lawsuits against your business. You need liability coverage in case the delivery man slips and falls while bringing your latest supply of Soylent (who has time for grocery shopping?).
  • You’re hired as a consultant and need to spend a week coding at a client’s office to make sure the Salesforce app you’re building fits with their systems. You want insurance in case you damage the client’s computers, servers, or office space.
  • Because you’re working as a freelance developer for a company (and not a regular employee), you’re not covered under its General Liability Insurance and need to carry your own.

How Much Does General Liability Insurance Cost?

We’ve helped hundreds of thousands of tech businesses find General Liability Insurance, so we’ve got lots of data on policy costs. If you want the long read on GL premiums, you can visit our page on General Liability Insurance costs for information on how size (freelancer vs. small company) and specialty (web designer vs. consulting) affect your premium.

Or you can get the CliffsNotes version:

Annual premium for freelancers (approximate):

$425 - $900

Annual (approximate) cost for small tech companies:

$500 - $900

Annual (approximate) cost of coverage for tech businesses with 15 to 60 employees:


These cost estimates are for policies that provide $1 million in coverage for each lawsuit and up to $2 million in total coverage for the policy’s term (usually one year).

The bottom line: for about $50 to $75 per month, small tech businesses can get million-dollar legal protection.

The Business Owner's Policy

Realistically, if you have business liability exposure, you probably also have some business property you want to protect. Whether that’s a laptop and an external hard drive or an office full of gear, it’s essential to your ability to do business and earn money.

If you’re into keeping your gadgets safe but not into spending your whole day pricing insurance policies, consider buying a Business Owner’s Policy (BOP), which includes both General Liability and Commercial Property Insurance: one policy, two types of coverage. Choosing the bundle may even be cheaper than buying the two policies separately.

The Small Business Insurance Leader