What does general liability insurance cover?

General liability insurance covers the cost of repairing property belonging to others that is damaged while in your possession.

Example: A mobile app developer borrows a client’s smartphone to install her new application. It slips out of her hands and shatters on the floor. A general liability policy would cover the cost of replacing the phone, so long as it falls within the policy limits.

In the event of accidental injury to a client, visitor, or other non-employee, general liability insurance can pay for the resulting medical or legal costs.

Example: A client trips over a power cable while visiting your computer repair shop. He breaks his wrist, which leads to expensive medical bills, including physical rehabilitation. The client sues your shop to recover the costs. Your general liability insurance can pay for the client’s medical bills, along with legal expenses from a lawsuit.

General liability insurance covers lawsuits over spoken defamation (slander), written defamation (libel), accidental copyright infringement, invasion of privacy, and other advertising injuries.

Example: An employee at a telecom company posts a picture of a customer on their business's Facebook page without their permission. When the customer sues, the telecom company's general liability policy helps pay for legal defense costs and the court-ordered judgment.

Most small small businesses choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit. This means the policy will pay up to $1 million on a single claim, and up to $2 million for the duration of the policy (typically one year).

High-risk and larger businesses may need more coverage. And if you’re buying a policy to meet the terms of a lease or contract, your limits must meet the requested minimum.

Errors and omissions insurance, also called E&O or professional liability insurance, can cover lawsuits over professional mistakes, including coding errors and missed deadlines.

Example: A data scientist fails to deliver a report to a client on time because of rolling blackouts at her office. The client sues for breach of contract. An errors and omissions policy would help pay expenses related to the lawsuit, including the cost of a settlement.

Workers' compensation insurance covers medical expenses when an employee suffers a work injury or illness. It also pays the employee part of the wages lost during recovery.

Example: An employee at an IT staffing agency is diagnosed with carpal tunnel syndrome caused by constant typing. The agency’s workers’ compensation policy covers the cost of his doctor’s visit, prescription, and ongoing physical therapy.

A business owner's policy (BOP), which combines general liability insurance with commercial property insurance, protects computers and other business property.

Example: A backup generator catches fire at a web hosting company, destroying and damaging nearby servers. The company’s BOP covers the cost of a replacement generator and equipment repair.

Cyber liability insurance covers data breaches and cyberattacks that affect a business or its clients.

Example: A data breach exposes sensitive client information at a business intelligence company. The company’s cyber liability policy covers the cost of notifying affected clients and supplying them with fraud monitoring services for one year following the breach.

Employment practices liability insurance (EPLI) covers costs when an employee alleges harassment, discrimination, wrongful termination, or another violation of worker rights.

Example: A female employee at a database administration business files a lawsuit over wrongful termination when the company downsizes. She claims that she was terminated because of her gender, as several male employees were kept on staff despite their less-than-stellar work records. EPLI covers the business’s legal expenses and eventual settlement.

Commercial auto insurance is required for all business-owned vehicles. Personal and leased vehicles used for business purposes should be covered by hired and non-owned auto insurance, as well.

Example: While driving to a client meeting, an IT consultant glances at his phone and accidentally hits another vehicle. His personal auto insurance does not include coverage for business use, but his commercial auto insurance policy pays for the damage to the other vehicle.

General liability insurance has certain coverage exclusions. For example, it doesn't pay defense costs for intentional copyright infringement or willful negligence – which can be criminal offenses. It also doesn't cover intentional property damage or injuries.

Intellectual property and defamation claims may be covered under general liability, but only if the claim results from a company's advertising. It doesn't apply to claims resulting from a company's services, which instead would be covered by an errors and omissions policy.

You can add endorsements, like a liquor liability rider for office parties, to fill gaps in coverage and extend your general liability insurance. Check with a TechInsurance agent to make sure your policy includes the right coverage for your business.