What Does General Liability Insurance Cover?

General liability insurance comes in two policy types: occurrence-based, the standard option, and claims-made, which is rare and sometimes not offered. The distinction comes down to timing.

• Occurrence-based policies cover events that take place during the policy period, even when a claim arrives later. When someone slips at a business in 2024, coverage applies even if the lawsuit comes in 2027 after a switch to a different insurer.
• Claims-based policies cover claims filed while the policy is active, but only for incidents that occurred on or after the policy's retroactive date. When an insurer is switched or coverage is dropped, older incidents may no longer be protected unless extended reporting coverage is added.

Both types use two limits: a per-occurrence limit that caps what the policy pays for a single incident and an aggregate limit that caps total payouts for the policy period (typically one year). Most coverage parts use these same limits, but medical payments (MedPay) and products and completed operations coverage are configured separately.

Most general liability policies do not carry a deductible. When one is present (common for certain claims such as third-party property damage), that amount is paid out of pocket, and the insurer covers the remainder up to the policy limits.

General liability insurance covers specific types of claims other people or businesses can file against you. Coverage applies when someone claims your business is legally responsible for their injury or loss. Some policies also add limited no-fault payments, such as medical payments coverage, for certain claims.

The table below covers the most common claim types in a standard policy and when coverage applies:

General liability insurance doesn't cover every business risk. Common exclusions include:

• Professional mistakes or bad advice, covered by professional liability insurance; its also known as errors and omissions insurance
• Employee injuries or illnesses, coverage through workers' compensation insurance
• Damage to your own property or equipment, falls under business property insurance
• Vehicle accidents, which require commercial auto insurance
• Intentional, fraudulent or illegal acts, which no policy covers

Because of these gaps, most businesses pair general liability with other policy types. We've also provided more in-depth guides comparing general liability to other coverages, so you can ensure you understand the differences.

• General Liability vs. Professional Liability
• General Liability vs. BOP Insurance
• General Liability vs Public Liability Insurance
• General Liability vs. Errors and Omissions Insurance

General liability insurance addresses risks associated with operating a customer-facing business, ranging from in-store accidents to mishaps during client visits. Most businesses carry it to:

• Protect against lawsuits over customer injuries or accidental property damage
• Satisfy the insurance requirements in leases, contracts and client agreements
• Handle claims tied to completed work or products already sold
• Cover legal defense costs and settlements without straining cash flow

General liability insurance is frequently the first policy businesses purchase because so many contracts and leases require proof of coverage.

General liability insurance pays when your business accidentally injures someone, damages their property or causes certain advertising-related harm. It's not a complete solution. It doesn't cover professional mistakes, employee injuries, your own property or vehicle accidents.

Before buying, check what limits your contracts and state require, and if there are no mandates, ensure you actually need general liability coverage to protect your company.