General Liability Insurance For Small Businesses
What Is General Liability Insurance?
General liability insurance is coverage for third-party bodily injuries or property damage caused by your business. It’s sometimes referred to as business liability insurance, commercial general liability insurance, or public liability insurance.
Simply put, general liability business insurance helps you manage the liabilities your business has in its dealings with the public. This can range from accidents happening at your place of business to accidents happening as a result of your business operations.
What Does General Liability Insurance Cover?
A general liability insurance policy helps to pay for incidents of injury or damages caused by your business. It may cover the cost of:
- Lawsuits
- Medical bills
- Lost wages
- Repairs
The most common general liability claims involve slips, trips, and falls or accidental damage to personal property. For example, a customer slips over a puddle of spilled liquid in a store or a cleaning business mistakenly discolors a rug with bleach. Without insurance, you would have to pay for these types of damages on your own.
General liability insurance does not cover first-party bodily injuries or property damage. For example, something that happens to you or your employees. If you hurt yourself on the job, you’ll need to have your medical bills covered by your own insurance.
We go more in-depth on what general liability doesn’t cover in the section, “What Does General Liability Insurance Not Cover?” below.
How Much General Liability Coverage Do I Need
The amount of general liability coverage your business needs depends on your business, such as:
- Industry: Some industries, like manufacturing, carry more risk than others, like retailers, which can impact how much coverage your business needs.
- Operations: The kind of work your business does, such as creating a product or offering a service, can require more or less coverage.
- Revenue: Bigger businesses often need more coverage since they service more people or offer something of higher value that needs higher coverage limits.
- Completed Operations Coverage: The occurrence is caused by work or operations the insured has completed
Coverage A: Bodily Injury & Property Damage Liability
- Premises Coverage: Accidents occurring at the insured's place of business.
- Operations Coverage: Accidents occurring away from the insured’s place of business while business operations were taking place.
- Products Coverage: Accidents occurring away from the insured’s place of business from a product the business sold, manufactured, or distributed.
- Completed Operations Coverage: Accidents occurring away from the insured’s place of business after operations or services are complete.
Coverage B: Personal & Advertising Injury Liability
- Coverage for financial and emotional injury from trademark infringement, plagiarism, or defamation are caused by the insured’s business advertising or marketing.
Coverage C: Medical Payments Liability
- Considered a “no-fault” or goodwill payment for first aid and medical expenses when an injury occurs accidentally on the insured’s premise, or due to business operations.
Coverage D: Damage to Premises Rented to You
- Also called “Fire Damage Legal Liability” or “Fire Legal Liability,” this is coverage for fire damage to premises rented to the insured, or temporarily occupied by the insured
What Does General Liability Not Cover?
- Products or goods your business manufactured, distributed, or sold
- Professional advice or services your business provides
- Worker’s compensation incidents
- Product recalls
- Commercial auto accidents
- Pollution or environmental harm
- Damages or injuries to you, employees, or business property
- Commercial property damage
Who Needs General Liability Insurance?
- Artists
- Caterers & Restaurants
- Contractors
- Distributors
- Entertainers
- Freelancers
- Importers
- Mobile businesses
- Online sellers
- Retailers
- Stylists
- Vendors & Exhibitors
- Wholesalers
Do I Need Business Liability Insurance For My LLC?
If you were to be named in a lawsuit, your LLC may help you be found not guilty. However, you would still be responsible for paying all the legal fees needed just to defend your business. This is where insurance can come in handy.
Insurance is a financial support system that can pay for the incidents an LLC cannot or will not cover. This may include paying for legal guidance, judgements, medical expenses, and settlements.
How Much Does General Liability Insurance Cost?
- Annual revenue: The higher your revenue, the more costly a lawsuit may be. This means you will need higher insurance limits, which may raise your premiums.
- Business size: The larger your business, the more products it may sell or services it may offer. You may have higher premiums to cover all your business activities.
- Industry: Some industries may be required to carry higher limits or certain coverages, which can raise the cost of your insurance premiums.
- Claims history: Businesses who frequently file insurance claims can expect to pay more for coverage.
- Insurance Canopy: $20/month
- Insureon: $42/month
- Progressive: $50/month
- Hiscox: $50/month
*Pricing for Insurance Canopy is pulled from fixed base rate policies.
*Pricing for Progressive is from 2020.
*Pricing for Hiscox can vary depending on the policy type and coverage.
**Some policies require a quote, and pricing may vary depending on coverage. Not all policies offer monthly payments; annual premiums were calculated on a monthly basis for this study only.
How Does General Liability Insurance Protect My Business?
According to the US Department of Justice, only 4–5% of personal injury lawsuits go to trial. The rest reach out of court settlements. The Insurance Information Institute recorded the median cost of personal injury jury awards for all liabilities in 2020 was $125,366.
How Do I Purchase General Liability Insurance?
- A stand-alone policy with only general liability coverage
- In tandem with product liability insurance and other coverages
- As a Business Owners Policy (BOP), which typically combines general liability insurance with property insurance
Insurance Canopy’s general liability insurance is found in all of our coverage options. We typically combine this coverage with product liability insurance or professional liability insurance—or sometimes all three!
Is General Liability Insurance Required By Law?
No, there are no laws or legal requirements to carry general liability insurance. However, you may find you have contracts with other businesses that require you to have coverage or show proof of insurance. So while it might not be something you’re legally required to have, it could make the difference in being employed or entering into a business partnership.
Is General Liability Insurance All I Need For My Business?
At Insurance Canopy, we allow you to customize your general and product liability policy to include other coverages such as:
- Inland Marine: Covers moveable supplies, inventory, and special tools and equipment.
- Cyber Liability: Covers stolen funds and data taken from a cyber attack.
- Additional Insureds:Covers third-party entities added to your policy.
- Trade Show Coverage: Covers your business from accidents occurring at events.
- Employee Benefits Liability Covers errors and omissions while administering benefits to your employees.
- Professional Liability: Covers third-party injuries or damages sustained by advice or services your business provided.
- Workers Compensation: Covers injuries, illnesses, and death of employees caused by your business.
- Product Recall: Covers the cost to remove a product from the market in the case of a recall.
- Hired/Non-Hired Auto: Covers vehicles used for business operations.
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