General Liability Insurance: What Small Businesses Should Know

Running a small business comes with its share of risks—unexpected accidents, customer injuries, or even legal disputes can arise when you least expect them. While you can’t predict every challenge, you can protect your business with general liability insurance (GLI). This coverage acts as a safety net, helping you manage financial risks without disrupting your operations.

If you’re new to business insurance or simply reviewing your options, here’s what you should know about general liability coverage.

What Is General Liability Insurance?

General liability insurance protects your business from common risks, including:

• Bodily injury claims (e.g., a customer slips and falls in your store)

• Property damage (e.g., you accidentally damage a client’s property)

• Advertising injuries (e.g., a competitor sues you for defamation or copyright infringement)

Unlike professional liability insurance (which covers errors in services), GLI focuses on third-party claims—those made by customers, vendors, or the public.

Why Do Small Businesses Need It?

Even the most careful business owners can face lawsuits or accidents. Without coverage, legal fees and settlements could strain your finances. Here’s why GLI is worth considering:

1. It Covers Legal Costs

Defending against a lawsuit can be expensive. GLI helps pay for attorney fees, court costs, and settlements, reducing out-of-pocket expenses.

2. It Builds Credibility

Many clients and landlords require proof of liability insurance before working with you. Having coverage signals professionalism and financial responsibility.

3. It Protects Your Assets

If a claim exceeds your policy limits, you could be personally liable. Insurance helps shield your business and personal assets from major losses.

What’s Typically Covered?

While policies vary, most general liability insurance includes:

• Bodily Injury – Medical expenses if someone is hurt on your premises.

• Property Damage – Repairs or replacement costs if your business damages someone else’s property.

• Personal & Advertising Injury – Libel, slander, or copyright infringement claims.

• Medical Payments – Minor medical bills for injuries on your property, regardless of fault.

What’s Not Covered?

General liability insurance has limits. It typically does not cover:

• Employee injuries (workers’ compensation handles this).

• Professional mistakes (errors & omissions insurance applies here).

• Intentional or criminal acts.

• Auto accidents (commercial auto insurance is needed).

How Much Coverage Do You Need?

The right amount depends on your business size, industry, and risk level. Many small businesses start with:

• $1 million per occurrence (for a single claim).

• $2 million aggregate (total coverage for the policy period).

High-risk businesses (like contractors or fitness studios) may need higher limits. Consulting an insurance agent can help tailor coverage to your needs.

How Much Does It Cost?

Premiums vary based on factors like:

• Industry risk level

• Business location

• Number of employees

• Claims history

On average, small businesses pay $500 to $1,500 annually for general liability insurance. Bundling it with other policies (like property insurance) can lower costs.

Final Thoughts

General liability insurance isn’t just a formality—it’s a practical way to safeguard your business from unforeseen setbacks. By understanding your risks and securing the right coverage, you can focus on growing your business with confidence.