Running a small business is stressful enough without worrying that one accident could wipe you out. That’s exactly what small business general liability insurance is designed to prevent.
In this guide, we’ll break down—in plain English—what general liability insurance covers, what it doesn’t, how much it typically costs, and how to actually choose a policy that fits your business and budget.
Table of Contents
What Is Small Business General Liability Insurance?
General liability insurance (sometimes called “business liability insurance” or “commercial general liability”) protects your business from third-party claims of:
- Bodily injury – someone gets hurt and blames your business
- Property damage – you or your employees damage someone else’s stuff
- Personal and advertising injury – libel, slander, copyright issues, or an ad gone wrong
It’s one of the most common business policies because:
- Many landlords, clients and vendors require it, and
- One serious claim can be more than your entire annual revenue.
If your business has customers, clients, or delivery people anywhere near your space—or if you work on client sites—you probably need this.
What Does Small Business General Liability Insurance Cover?
Coverage varies by insurer and policy, but most general liability policies typically cover:
1. Bodily Injury to Others
If a customer, vendor, or visitor is injured because of your business operations, general liability can help pay for:
- Medical bills
- Legal defense costs
- Settlements or judgments
Example: A customer trips over a loose cable in your shop, breaks their wrist, and sues you. General liability is the policy that steps in.
2. Property Damage to Others
If you or your employees accidentally damage someone else’s property while doing business, your policy may cover:
- Repair or replacement costs
- Legal costs if the client sues
Example: You’re a contractor and your worker drops a tool on a client’s expensive tile floor. Or you’re an IT consultant who spills coffee on a client’s laptop.
3. Personal and Advertising Injury
This part of the policy helps if your business is accused of:
- Libel or slander (defamation)
- Invasion of privacy
- Using someone’s slogan, logo, or creative work in your ads without permission
Example: A competitor claims your ad falsely states their product is unsafe. They sue for damages. General liability may help cover your legal defense.
What General Liability Insurance Does Not Cover
This is where a lot of small business owners get surprised. General liability doesn’t cover everything. Common exclusions include:
- Damage to your own property
- For that, you need commercial property insurance or a Business Owner’s Policy (BOP).
- Injuries to your employees
- Those go under workers’ compensation insurance, not general liability.
- Professional mistakes or bad advice
- That typically needs professional liability / errors & omissions (E&O) coverage.
- Intentional harm or illegal acts
- If you intentionally cause damage or break the law, insurance won’t bail you out.
- Auto accidents involving business vehicles
- That usually requires commercial auto insurance.
Do I Really Need General Liability Insurance?
Ask yourself three quick questions:
- Do customers or clients ever visit your location?
– Storefront, office, home office, or warehouse. - Do you or your employees ever work at client sites?
– Contractors, cleaners, consultants, photographers, etc. - Do you advertise your business online or offline?
– Website, social media, print, radio, etc.
If you answered “yes” to any of these, general liability isn’t just “nice to have”—it’s usually a core risk management tool.
Plus, many:
- Landlords require proof of coverage before you sign a commercial lease.
- Clients (especially larger companies) require it in their contracts.
No policy? You might lose the contract or lease.
How Much Does General Liability Insurance Cost?
Costs vary based on several factors:
- Type of business (contractor vs graphic designer vs restaurant)
- Location (city, state, neighborhood risk)
- Annual revenue and payroll
- Claims history
- Limits and deductibles you choose
Generally, lower-risk businesses (like consultants or online service providers) pay less than higher-risk ones (like contractors, restaurants, or retail storefronts).
You’ll usually choose:
- A per-occurrence limit – max the insurer pays per claim
- A policy aggregate limit – max they’ll pay during the entire policy term
Higher limits = higher premiums—but more protection when something big happens.
General Liability Insurance vs Other Key Business Policies
To keep it clear, here’s how general liability compares to other coverage you’ll probably see:
- General Liability
- Third-party bodily injury, property damage, and certain advertising injuries.
- Commercial Property
- Your building, equipment, inventory, furniture, computers, etc.
- Business Owner’s Policy (BOP)
- Bundles general liability + commercial property (sometimes other coverages) into one package, often at a lower price.
- Professional Liability (E&O)
- Covers financial losses caused by mistakes, bad advice, or failure to deliver professional services.
- Workers’ Compensation
- Required in most states when you have employees. Covers workplace injuries and illnesses.
For many small businesses, a BOP plus workers’ comp is a common starting combo.
How to Choose the Right General Liability Policy
Here’s a simple step-by-step framework you can use (and explain to your readers):
1. Map Your Risk
- List how customers interact with your business.
- Think about worst-case scenarios: slips, falls, property damage, lawsuits.
- Consider any contractual requirements from landlords or clients.
2. Decide on Coverage Limits
Common small business limits are:
- $1 million per occurrence
- $2 million aggregate
Higher-risk industries may want more. Lower-risk service businesses might be okay with standard limits at first, then increase as they grow.
3. Compare Quotes From Multiple Providers
Instead of grabbing the first quote, recommend:
- Getting 3+ quotes from insurers or brokers.
- Looking at:
- Annual premium
- Coverage limits
- Exclusions
- Deductible
- Customer service / claims reviews
4. Ask About Bundling
Many insurers offer discounts if you:
- Bundle general liability + property into a Business Owner’s Policy, or
- Buy multiple lines (like commercial auto or cyber liability) from them.
5. Review Yearly (or When Things Change)
Any time you:
- Hire employees
- Move locations
- Add services or products
- Hit new revenue levels
…it’s time to review coverage and limits.
How to Get General Liability Insurance Step-by-Step
You can make this a simple checklist in your article:
- Gather basic business info:
- Legal business name
- Address and locations
- Number of employees
- Estimated annual revenue and payroll
- List your operations and services clearly.
- Decide your preferred coverage limits and deductible range.
- Request quotes:
- Directly from insurers
- Through a licensed local agent
- Through an online business insurance marketplace
- Compare not just price, but coverage details and exclusions.
- Purchase the policy and request a certificate of insurance (COI).
- Keep a copy of your COI for:
- Landlords
- Clients
- Vendor agreements
Common Mistakes Small Business Owners Make With General Liability
You can use this as a subheading to keep readers on-page longer (good for RPM):
- Assuming an LLC is enough protection
– Legal structure helps, but it doesn’t pay claims or legal fees. Insurance does. - Underestimating their risk because the business is “small”
– Lawsuits don’t care about your revenue size. - Not reading exclusions
– Some policies exclude certain industries or activities. Always check. - Letting coverage lapse
– Forgetting to renew can leave gaps just when something happens. - Using the wrong type of policy for their work
– Consultants/creatives often need both general liability and professional liability.
FAQs – Small Business General Liability Insurance
Is general liability insurance required by law?
In most places, general liability itself isn’t legally mandatory, but it’s often contractually required by landlords or clients. However, other policies like workers’ compensation are legally required when you have employees in many states.
Can I get general liability insurance if I run my business from home?
Yes. Even home-based businesses can buy general liability coverage. Don’t assume your personal homeowners or renters insurance covers business-related claims—it often doesn’t.
How quickly can I get coverage?
Many insurers and online platforms can issue a policy the same day once they have your information and payment.
What happens if a claim is filed against my business?
*Contact your insurer or agent immediately. They’ll usually:
*Assign a claims representative
*Investigate the incident
*Provide or arrange legal defense
*Handle settlements up to your policy limits
Is general liability insurance tax deductible?
In many cases, business insurance premiums are treated as ordinary and necessary business expenses, but readers should confirm with a tax professional for their specific situation.