Do You Need General Liability Insurance? (2025 Requirements)

Key Takeaways

General liability insurance requirements vary by state, but you'll need it if you're a contractor or daycare provider in certain states.

Your small business needs additional coverage beyond general liability insurance, such as professional liability, commercial property, or cyber insurance.

You can get general liability insurance by gathering quotes online, choosing a provider and activating your coverage.

Do I Need General Liability Insurance?

While most states don't legally require businesses to carry general liability insurance, some professions need it for licensing.

Contractors need general liability insurance to get licensed in Washington State, New York City, Washington D.C., and Georgia. Daycare providers must also carry coverage in Washington and Texas, with Texas requiring at least $300,000 per child in your care. These requirements change regularly, so double-check with your state licensing board before applying for coverage.

When Do You Need General Liability Insurance?

Even without legal requirements, you'll need general liability insurance in many business situations:

Leasing commercial space.

Most landlords won't lease to you without general liability coverage. They want financial protection if a customer gets injured on the property or your business causes damage. Coverage requirements vary, but often start at $1 million per occurrence.

Working with clients and vendors. Many businesses won't hire contractors, consultants or service providers without proof of insurance. It protects them from liability if your work causes property damage or someone gets hurt.

Running a customer-facing business.

Restaurants face slip-and-fall risks when customers spill drinks or trip over chairs. Retail shops risk customers getting hurt by falling merchandise. Even coffee shops need coverage if someone burns themselves on hot coffee.

Providing services at client locations.

Cleaning services might accidentally damage expensive artwork. Landscapers could break sprinkler systems. Home repair contractors risk damaging flooring or walls. If you work on other people's property, costly damage claims can quickly add up.

Without coverage, one lawsuit could cost you tens of thousands in legal fees alone, plus damages that could shut down your business.

LEARN MORE ABOUT GENERAL LIABILITY INSURANCE

Beyond understanding general liability insurance requirements, these guides help you choose the best coverage for your small business:

Is General Liability Insurance Enough?

Many small business owners assume general liability insurance covers everything, but it leaves many gaps. While it covers customer injuries and property damage, it won't protect you from professional mistakes, cyber attacks or damage to your own equipment. Most small businesses need additional policies to address these risks.

Do I Need More than General Liability Insurance?

General liability insurance is important, but most business owners also discover they need additional financial protection. Different industries face unique challenges that general liability alone can't handle. Knowing what risks your industry faces helps you choose the right types of coverage to keep your business safe.


Construction/Contractors	Commercial auto, workers' compensation, tools and equipment	Construction sites present high injury risks, and many states require GL coverage for contractor licensing. Vehicle coverage protects against job site transportation accidents, while tools coverage protects expensive equipment.
Restaurants/Food Service	Commercial property, workers' compensation, business interruption	High customer traffic increases slip-and-fall risks, while kitchen equipment needs property protection. Business interruption covers lost income if health violations or equipment failures force closure.
Retail Stores	Commercial property, product liability, business interruption	Falling merchandise can injure customers, and wet floors create slip-and-fall risks. Inventory protection and coverage for defective products, plus income protection during forced closures, are essential.
Professional Services	Professional liability, cyber liability, commercial property	Office visits expose premises liability, while professional errors can result in costly malpractice claims. Data protection is increasingly important, and office equipment needs property coverage.
Home Services	Commercial auto, tools and equipment	Working in customers' homes increases property damage risks. Vehicle coverage and protection for tools and equipment are necessary for mobile service businesses.
Health Care Providers	Professional liability, cyber liability, commercial property	Patient interactions create premises liability, while medical errors require malpractice coverage. Patient data protection is legally required, and medical equipment needs property protection.
Technology/IT Services	Professional liability, cyber liability, tools and equipment	Client site visits create liability exposure, while coding errors or system failures can cause significant financial losses. Data breach protection is critical, and computer equipment needs coverage.
Manufacturing	Commercial property, product liability, business interruption	Product defects can cause third-party injuries, while factory visitors face potential hazards. Equipment and inventory need property protection, plus income coverage during production shutdowns.
Real Estate Agencies	Professional liability, commercial auto	Property showings create liability exposure at various locations. Professional errors in transactions can result in significant financial claims, and vehicle coverage protects during property visits.
Beauty/Personal Services	Commercial property, professional liability, tools and equipment	Chemical treatments and equipment create injury risks, while high customer traffic increases slip-and-fall exposure. Professional errors in treatments need coverage, and salon equipment requires protection.

Getting the right mix of coverage means you'll have proper financial protection when you file a claim. The best combination of business insurance depends on your operations and the unique risks your industry faces.

How To Get General Liability Insurance

Most business owners know they need GL coverage but aren't sure where to start. Whether you're wondering "Do I need general liability insurance?" or you've already decided you need coverage, the application process is straightforward. Many insurers can even provide same-day quotes with quick approval for standard businesses.

1
Figure out if you need general liability insurance.
Start by checking if your industry requires coverage and assessing your business risks. Consider your annual revenue, number of employees and whether customers visit your location. Most small businesses choose $1 million per occurrence with $2 million aggregate limits.
2
Gather your business information.
Insurance companies will ask for your business details, including your industry classification, annual revenue, number of employees, business address and years in operation. Have your business license and any required certifications handy.
3
Compare quotes and policy details.
Get quotes from at least three insurance providers through direct contact, independent agents or online comparison tools. Don't just compare prices. Look at what each policy covers and excludes. Check the insurance company's financial strength rating and customer service reputation.
4
Purchase and activate your coverage.
Once you've chosen a provider, you can buy coverage online or over the phone. Most insurers can email you immediate proof of insurance, which you'll need for contracts, leases and licensing requirements.
5
Maintain your coverage long-term.
Pay your premiums on time and update your insurer about business changes throughout the year. Before renewal, review whether you've added employees, increased revenue, expanded services, or moved locations. These changes may require higher coverage limits to keep your financial protection in sync with your growing business.

Do I Need General Liability Insurance for My Business?: Bottom Line

General liability insurance requirements vary by state, but most businesses need coverage for practical reasons. Contractors and daycare providers face legal mandates in certain areas, while other businesses need it for leases and client contracts. Getting coverage is simple: compare quotes online, choose a provider, and activate your policy to protect your business.

Do You Need General Liability Insurance?: FAQ

General liability insurance requirements can seem confusing, so we've answered the most frequently asked questions about coverage needs and costs:

Which states require general liability insurance for contractors?

Contractors must carry GL insurance for licensing in Washington State, New York City, Washington D.C. and Georgia. Contact your state licensing board to verify what you need, as minimum limits may vary by area and contractor type.

How much does general liability insurance cost for small businesses?

Costs vary by industry, state and risk factors. Your annual revenue, number of employees and business type affect pricing. Getting quotes from multiple insurers helps you find competitive rates for your specific situation.

How does general liability insurance differ from professional liability coverage?

General liability covers customer injuries and property damage at your business location or from your operations. Professional liability covers financial losses from your professional mistakes, errors or failure to deliver promised services. Most businesses need both types of coverage.

Does general liability insurance cover my business equipment and inventory?

No, general liability insurance doesn't cover damage to your equipment, inventory or business property. Instead, commercial property coverage protects these business assets from fire, theft, vandalism and weather damage.

Can I add general liability to my existing business insurance policy?

Yes, most insurers offer general liability as part of a business owner's policy (BOP) that bundles multiple coverages. It often costs less than buying separate policies and simplifies insurance management with one policy and payment.

What happens if I don't have general liability insurance and someone gets hurt?

You'll pay out-of-pocket legal defense costs, medical expenses and potential settlement amounts. A single lawsuit could cost tens of thousands in legal fees alone, plus damages that could threaten your business's financial survival.

How long does it take to process a general liability insurance claim?

Simple claims like minor customer injuries might resolve in weeks, while complex property damage or lawsuit claims can take months. Your insurer will investigate the incident, determine coverage, negotiate settlements or provide legal defense as needed.

Do I need general liability insurance if I work from home?

Yes, if clients visit your home office or you provide services at client locations. Your homeowners insurance typically excludes business activities. Even home-based businesses face liability risks from client injuries or property damage.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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sources

Washington State Department of Labor & Industries. "Register as a Contractor." Accessed August 4, 2025.
New York City Department of Buildings. "Project Requirements: Contractor Permit & Insurance." Accessed August 4, 2025.
District of Columbia Department of Licensing and Consumer Protection. "License Types Requiring Insurance." Accessed August 4, 2025.
Georgia Attorney General Consumer Protection Division. "How can I verify that a contractor is licensed and insured?." Accessed August 4, 2025.
Washington State Legislature. "RCW 43.216.700: Day care insurance." Accessed August 4, 2025.
Texas Department of Insurance. "Do I Need Insurance to Run a Daycare in My Home?." Accessed August 4, 2025.

Do You Need General Liability?