Updated: October 27, 2025

Advertising & Editorial Disclosure

Key Takeaways
blueCheck icon

General liability insurance covers bodily injury, property damage and advertising injury claims but excludes professional errors, employee issues and cyber incidents.

blueCheck icon

All businesses should carry general liability insurance, with most needing $1 million coverage and high-risk industries requiring $2 million or more.

blueCheck icon

General liability insurance isn't legally required for most businesses, but clients and landlords often require coverage before working with you.

What Is General Liability Insurance?

General liability insurance provides financial protection against third-party lawsuits and claims. A customer who is injured at your location, property damage from your operations and accusations about your advertising — it covers legal defense costs and settlements.

Why do you need general liability insurance? Every business has these risks, even if you work from home or run a small operation. A client could trip over your laptop cord during a meeting, your employee accidentally damages someone's property, or a competitor might claim your social media post was defamatory. Without general liability insurance, you pay these costs out of pocket.

Find Insurance for Your Business

Select your industry and state to get a customized quote.

Industry
State
mglogo icon
LEARN MORE ABOUT GENERAL LIABILITY INSURANCE

What Does General Liability Insurance Cover?

General liability insurance covers three main types of third-party claims against your business. General liability covers bodily injury when customers are injured on your property, property damage caused by your business operations, and personal and advertising injury claims like copyright infringement or defamation. The following table shows scenarios covered and not covered by a general liability insurance policy.

Customer injuries on your property
Yes
A customer slips on a wet patch on your floor and breaks their wrist. Your general liability policy covers their $8,000 emergency room bill and any legal fees if they sue.
Professional mistakes or negligence
No

Your marketing consultant's campaign strategy flops, costing a client $75,000 in lost revenue. General liability does not cover professional services, so you need professional liability insurance.

Property damage from your business operations
Yes
Your contractor accidentally cuts through a gas line, causing $25,000 in damage to a client's building. General liability covers the repair costs.
Workplace discrimination or harassment
No

An employee sues your company for $100,000, claiming age discrimination during layoffs. These employment-related claims fall outside general liability coverage and require employment practices liability insurance (EPLI).

Copyright or trademark infringement claims
Yes
You use a stock photo in your ad campaign without proper licensing. The photographer sues for $15,000. Your general liability insurance covers defense costs and settlement.
Employee injuries at work
No

General liability insurance excludes workplace injuries to your employees. If your warehouse employee injures their back lifting heavy boxes and needs surgery costing $35,000, workers' compensation insurance will cover this and lost wages.

Defective products causing customer losses
Yes
Your candle-making business sells a defective candle that tips over and causes a house fire, resulting in $50,000 in damage. Coverage A of your general liability policy covers the claim.
Vehicle accidents during business activities
No

Your driver rear-ends another car while delivering office supplies to a client, causing $20,000 in damage. General liability insurance excludes vehicle accidents. Commercial auto insurance covers these accidents.

Data breaches or cyber attacks
No

Hackers steal 5,000 customer credit card numbers from your online store. General liability excludes cyber incidents, but cyber liability insurance covers costs and legal fees.

General Liability Insurance Coverage Types and Policy Terms

General liability insurance breaks down into three coverage sections for different claims. Coverage A pays for bodily injury and property damage. Coverage B covers personal and advertising injury. Coverage C handles medical expenses regardless of who caused the incident. Your general liability insurance policy limits and deductibles determine how much protection you receive when these claims happen.

    blueCheckmark icon
    Coverage A (bodily injury and property damage liability)

    This general liability insurance coverage provides financial protection when your business is legally responsible for injuries to others or damage to someone else's property. Coverage A pays their medical bills and legal fees if a customer slips at your store and is injured.

    blueCheckmark icon
    Coverage B (personal and advertising injury)

    Coverage B in your general liability policy covers reputational harm and intellectual property violations, such as libel and slander claims, when someone accuses your business of making false statements. It also covers copyright and trademark infringement, like using a photographer's image in your ads without permission.

    blueCheckmark icon
    Coverage C (medical payments)

    Coverage C in your general liability policy pays for third-party medical expenses regardless of who's at fault. It pays for the emergency room bill if a customer trips at your store and sprains their ankle, preventing minor incidents from becoming expensive lawsuits.

    blueCheckmark icon
    Per-occurrence limits (the most your policy pays for one incident)

    Your per-occurrence limit is the maximum amount the insurer will pay for a single claim. When you see “$1 million/$2 million” on your policy, that first number ($1 million) is your main per-occurrence limit, though some coverage sections have their own limits. So if a customer sues for $1.2 million under Coverage A (bodily injury), your policy covers $1 million, and you pay the remaining $200,000.

    blueCheckmark icon
    Aggregate limits (your total coverage for the year)

    Your aggregate limit caps how much your policy pays for all claims combined during your policy year. Your aggregate limit is the second number in $1 million/$2 million ($2 million). Once the insurer pays out $2 million across all your claims, your coverage is exhausted until you renew.

    blueCheckmark icon
    General Liability Policy Deductibles

    Some general liability policies have deductibles you pay before coverage kicks in, though many policies have $0 deductibles. You pay the deductible on the entire claim, not individual coverage sections. For example, if you have a $1,000 deductible and face a $15,000 lawsuit under Coverage A, you pay the first $1,000 and the insurer covers the remaining $14,000.

Find Insurance for Your Business

Select your industry and state to get a customized quote.

Industry
State

Who Needs General Liability Insurance?

Every business needs general liability insurance to cover costs from third-party lawsuits. A client could get injured during a home office meeting, or your work at a customer's location could cause damage. Coverage protects you financially in both scenarios.

While general liability insurance isn't legally required for most businesses, many situations make it practically necessary. Clients often require proof of coverage before signing contracts, and landlords include insurance requirements in commercial leases.

High-risk industries have greater liability exposure and often have specific coverage requirements, including:

    houseRebuild icon

    Construction and contracting businesses face higher risks from dangerous equipment and job sites. States like California, Texas and Florida require general liability insurance for contractor licensing, with minimum coverage typically ranging from $300,000 to $1 million. General contractors across all states commonly require subcontractors to provide certificates of insurance before starting work.

    smallCalculator icon

    Professional services like consulting, accounting and legal services have lower bodily injury risks but need protection against advertising injury claims. While state licensing boards don't typically require general liability coverage, professional contracts and client agreements commonly require coverage before starting work.

    hotel icon

    Retail and hospitality businesses have frequent customer interactions and slip-and-fall risks. Landlords often require general liability insurance in lease agreements, and many retail platforms require coverage before allowing online sales.

    methodologyTwo icon

    Manufacturing companies need substantial coverage due to product liability exposure and completed operations risks. Federal contracts often require minimum coverage amounts, and some states require coverage for specific manufacturing licenses, though requirements vary by product type and distribution.

How Much General Liability Coverage Do You Need?

General liability insurance coverage amounts depend on your business risks and assets. Businesses that work with customers, handle products or visit client locations need this financial protection against lawsuits. High-risk businesses like construction, manufacturing and restaurants need more coverage than low-risk businesses like consulting or bookkeeping. Most companies should carry at least $1 million/$2 million general liability coverage, with higher limits for high-risk industries.

Three factors determine how much general liability insurance your business needs:

  1. 1
    Industry risk

    Construction companies need at least $2 million per occurrence because of dangerous equipment and job site hazards. Professional services like consulting don't face the same physical risks as construction or retail. They can get by with lower coverage amounts.

  2. 2
    Business size

    Your business size matters. A retail chain faces different risks than a two-person consulting firm — one sees hundreds of customers walk through the door daily, while the other might host three client meetings weekly.

  3. 3
    Asset protection

    Choose coverage that matches what you own. If your manufacturing business has $3 million in equipment and property, carry at least $3 million in liability coverage so lawsuits can't wipe out everything you've built.

Commercial General Liability Insurance: Bottom Line

General liability coverage provides financial protection against expensive third-party claims involving property damage, bodily injury and reputational harm. While not legally required, most businesses need it to cover costs from customer interactions and meet client contract requirements. Construction, retail and manufacturing companies have the highest risks and benefit most from this coverage.

Commercial General Liability Insurance: FAQ

Here are answers to common questions about general liability insurance coverage, costs and requirements.

Do I need a certificate of insurance for general liability coverage?

Can I buy general liability insurance online?

What other types of business insurance do I need besides general liability?

Does general liability cover lawsuits?

Loading...

About Mark Fitzpatrick

Mark Fitzpatrick headshot

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!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

Read Full Bio »

MoneyGeek Address:1325 Howard Ave, Suite 338
Burlingame, CA 94010

MoneyGeek Phone:904-878-4335

About MoneyGeekPressPrivacy PolicyTerms of UseSitemap
Copyright © 2025 MoneyGeek.com. All Rights Reserved