What Is General Liability Insurance and What Does It Cover?

General liability insurance protects your business when customers get injured, property gets damaged, or someone claims your advertising caused harm. This core type of business insurance pays for lawsuits related to covered claims and is often required by clients and landlords.

Learn what general liability insurance covers and who needs it.

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What Is General Liability Insurance and What Does It Cover?

By Mark Fitzpatrick

Edited by Venus Zoleta

Contributions by 6+ experts

Updated: September 10, 2025

Advertising & Editorial Disclosure

Key Takeaways

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

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

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

What is General Liability Insurance?

General liability insurance protects businesses from third-party lawsuits and claims. Whether it's a customer who gets hurt at your location, property damage from your operations, or accusations about your advertising, this coverage handles legal defense costs and settlements.

Why do you need general liability insurance? Every business faces 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'd pay these costs out of pocket.

What Does General Liability Insurance Cover?

General liability insurance covers three main types of third-party claims against your business. What does general liability insurance cover? General liability covers bodily injury when customers get hurt on your property, property damage caused by your business operations, and personal injury claims like copyright infringement or defamation. The following examples are scenarios covered and not covered by a general liability insurance policy.

Potential Claim	Covered by General Liability	Business Risk Examples
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.
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.
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.
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.
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.
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).
Employee injuries at work	No	General liability insurance excludes workplace injuries to your employees. If your warehouse employee injures his back lifting heavy boxes and needs surgery costing $35,000, workers' compensation insurance will cover this and lost wages.
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, but commercial auto insurance covers it.
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.

LEARN MORE ABOUT GENERAL LIABILITY INSURANCE

General Liability Insurance Coverage Types and Policy Terms

General liability insurance protects your business with three main coverage areas that handle different third-party claims. Coverage A handles bodily injury and property damage, Coverage B addresses personal and advertising injury, and Coverage C pays medical expenses regardless of fault. Your general liability insurance policy limits and deductibles determine how much protection you receive when these claims happen.

Coverage A (bodily injury and property damage liability)

This general liability insurance coverage protects your business when you're legally responsible for physical injuries to others or damage to someone else's property. If a customer slips at your store and gets hurt, Coverage A pays their medical bills and legal fees.

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 about someone. It also covers copyright and trademark infringement, like using a photographer's image in your ads without permission.

Coverage C (medical payments)

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

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

This is the maximum amount your 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.

Aggregate limits (your total coverage for the year)

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

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 your insurer covers the remaining $14,000.

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Who Needs General Liability Insurance?

All businesses should carry general liability insurance to protect against third-party lawsuits, regardless of size or industry. Even the smallest home-based business faces risks when clients visit for meetings or when delivering services to customer locations.

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 face greater liability exposure and often have specific coverage requirements including:

If you're in construction or contracting, you have 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. See our guide togeneral liability insurance for contractors.

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.

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.

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 protection against lawsuits. High-risk businesses like construction, manufacturing and restaurants need more coverage than low-risk businesses like consulting or bookkeeping. Most businesses 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
Industry risk
Construction companies need at least $2 million per occurrence because of dangerous equipment and job site hazards. Professional services like consulting need less coverage due to lower physical risk exposure.
2
Business size
More employees and customers mean more chances for accidents. A retail chain with hundreds of daily customers needs higher limits than a small consulting firm with only a few client meetings per week.
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: The Bottom Line?

General liability coverage protects your business from expensive third-party claims involving property damage, bodily injury and reputational harm. While not legally required, most businesses need it to handle customer interactions safely and meet client contract requirements. Construction, retail and manufacturing companies face the highest risks and would benefit most from this coverage.

Commercial General Liability Insurance: FAQ

What kind of financial protection does general liability insurance provide?

General liability insurance covers three things: if someone gets hurt at your business, if you accidentally damage someone's property and if someone claims you hurt their reputation.

How do I determine my general liability coverage limits?

Most small businesses need $1 million per occurrence with $2 million aggregate limits. Industries like construction need higher coverage due to increased risks. When selecting limits, match coverage to your business assets and evaluate industry risks and client contract requirements.

Does general liability cover lawsuits?

Yes, general liability covers legal defense fees, court costs and settlements up to policy limits. Your policy covers judgment amounts, protecting business assets from expensive claims. Learn about the commercial insurance claims process so you know what to expect when filing a general liability claim.

What's the difference between coverage A, B and C in general liability insurance?

Coverage A is for bodily injury and property damage liability. Coverage B is for personal and advertising injuries like libel and copyright infringement. Coverage C covers medical payments for injuries on your property regardless of fault. Each has separate limits for comprehensive financial protection.

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

Yes, most clients and landlords require a certificate of insurance (COI) proving active general liability coverage. Construction firms and corporations demand this proof to protect themselves. COIs are available immediately after purchasing coverage at no extra cost.

What types of businesses should prioritize general liability insurance?

Construction and contracting businesses face the highest risks and need higher coverage for licensing. Retail and hospitality need slip-and-fall protection. Professional services need advertising injury coverage. Any company that has customer interactions or physical locations should have it.

How much does general liability insurance cost for small businesses?

Your general liability insurance cost depends on your industry (restaurants pay more than consultants), business size, location and how much coverage you choose. Most small businesses pay between a couple hundred to several thousands of dollars annually.

How do I compare general liability insurance quotes?

Compare coverage limits, not just price, because cheaper policies may leave you underinsured. Ask about deductibles, exclusions and discounts. Ensure the policy covers your actual business operations. Finding cheap general liability insurance is possible if budget is a concern.

Can I buy general liability insurance online?

Yes, it’s possible to get business insurance online. Many insurers offer instant online quotes and coverage. Provide basic business information like industry type, employees and revenue. For straightforward businesses, coverage begins immediately after payment with an instant certificate of insurance access.

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

Beyond general liability, consider professional liability insurance for service errors and commercial property insurance for your equipment and inventory. It's also worth investing in workers' compensation if you have employees. These types of business insurance work together to fill coverage gaps.

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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