General liability insurance is one of the most common and necessary policies that businesses need. This policy primarily covers allegations or incidents where you cause bodily injury or property damage to someone else (or another business), but it also covers other incidents, such as copyright infringement and defamation.

3 Reasons Businesses Need General Liability Insurance

1. To Provide A Certificate Of Liability Insurance

First-time buyers of general liability insurance often purchase the policy to produce a certificate of insurance (COI) for a customer, vendor, or bank they want to do business with. Many companies want to know that you have the necessary insurance to pay for any incident that might arise, including if your actions result in a lawsuit for them.

2. To Comply With State Or Federal Regulations

Other buyers have to purchase general liability insurance to comply with government requirements for the operation of their type of business. Generally, these requirements are specific to the state where your business operates, but purchasing general liability insurance is often required for construction contractors, cosmetologists, car dealers, and real estate agents.

3. To Protect The Business From Major Losses

After the significant amount of time, resources, and money invested in building a viable business, many business owners want to make sure their investment is protected from certain incidents that could bankrupt the company. A general liability insurance policy covers a lot of the incidents that could lead to a costly lawsuit.

What types of businesses need general liability insurance?

Genera liability insurance is a must-have for businesses that:

Have A Physical Location

Businesses with physical premises (such as an office building or manufacturing plant) face increased risk. These risks are a varied as an employee’s computer starting a fire and burning down your landlord’s building or someone tripping on the carpet and injuring themselves.

Deal With The General Public

Regularly interacting with the general public increases your exposure to risk. This includes liability arising from the products or services you offer, to allegations of incidents you had no part in. The more people your business interacts with, the higher your exposure to an incident (or allegation).

Make A Product

When people interact with a tangible product that you manufactured, designed, or crafted, it can lead to an incident where that product harmed someone in some way. For example, if you own a restaurant, the food you serve can make someone sick or burn them.

Visit Client Sites

If you or your employees travel to visit clients, there is a risk that you might damage their property while on site. This could be a corporate employee accidentally damaging expensive art hanging in an office or a construction contractor hitting a water line and flooding the building.

Advertise

If you are active on social media or publicly advertise your business and products, a general liability policy would protect you against a wide range of accidental copyright infringement and defamation claims.

Sell Tangible Goods And Products

If you are in the business of selling or distributing tangible products, you have some liability if those products injure people or cause property damage—even if you don’t make the products yourself. For example, if you owned a hardware store and it was determined that ladders you sold had a defect resulting in the injury of a customer, your business might get involved in a product liability lawsuit… even though you had no role in designing or manufacturing the ladder.

Work With Other Businesses (B2B)

As a general rule, you will need to purchase general liability insurance at some point if your business works with other companies. Whether it’s a partner, contractor, or customer relationship, businesses with sophisticated risk management departments will want to know that you are insured for the type of work you are performing for them. They want a way to collect for damages you cause, but also be assured that you will pay for any incidents you cause to mutual customers (e.g. in the case you acted as a subcontractor for another company).

General Liability Insurance DOES Cover

Premises Liability

Property damage or bodily injury that takes place on property that your business owns or occupies. Premises liability claims could arise from uneven pavement, slippery floors, icy walks, falling objects, inadequate security, chair defects, and concealed holes.

Physical Injuries

Unintentional injuries to someone during the course of doing business. This covers everything from injuries that occur while on client premises or due to a product you sold to a customer years prior.

Damaging Someone Else’s Property

Damage your business causes to other people’s or other company’s property. This could be anyone or any business that experienced property damage as a result of your business operations—not just a customer or partner.

Products Liability

Property damage or bodily injury that your product causes others after you have produced and sold the product.

Completed Operations Liability

Liability that arises from a contractor’s project after the work is finished. For example, if a deck on a house collapsed and injured three people a year after it was built, the completed operations liability claim would be covered on the contractor’s general liability insurance policy.

Medical Payments

Medical bill reimbursement for others, regardless of fault. Note: This coverage is a small limit, usually $5,000 to $15,000, on most general liability insurance policies.

Personal Injury

Liability arising from certain intentional torts, such as libel, slander, wrongful eviction, false arrest, and invasion of privacy.

Advertising Injury

Most liabilities that arise from your marketing operations, such as misappropriation of advertising ideas and copyright infringement.

Settlements Or Verdicts Against You

Both settlements and verdicts against your company for covered claims, up to the policy’s limit of insurance (e.g. $1,000,000 on most policies)

Legal Defense Costs

Legal costs to defend your business and negotiate favorable settlements on your behalf. Typically, this coverage is not included in the limit of liability, meaning there is no limit on the financial amount the insurance company can pay until the policy limits are exhausted through a settlement payment.

General Liability Insurance DOES NOT Cover

Giving Incorrect Advice

Financial harm that could arise as a result of incorrect advice given to a client. For this coverage, you need an errors & omissions insurance policy.

Damage To Owned Property

Property you own. For this coverage, you need a commercial property insurance policy.

Employee Injury

Injuries to either you or your employees. This coverage would be provided under a workers compensation insurance policy.

Expected Or Intended Incidents

Damage you intended to cause, or damage that could have been expected to happen given your actions.

Data Breach Liability

Liability arising from your sensitive data becoming public after a cyberattack or data breach. For this coverage, you need a cyber liability insurance policy.

Incidents You Aren’t Legally Liable For

It has to be determined that you are legally liable for paying the damages before the insurance provider will pay the claim.

General Liability Insurance Costs

Costs can vary based on your location and the specific type of work you perform. Here are some examples of small business general liability quotes:

 

Marketing Consultant

Painting Contractor

Therapist

State

CA

FL

OR

Annual Revenue

$250,000

$75,000

$150,000

Per Occurrence Limit

$1,000,000

$1,000,000

$1,000,000

Aggregate limit

$2,000,000

$2,000,000

$2,000,000

Deductible

$0

$250

$0

Monthly Cost

$30/mo

$63/mo

$21/mo

Annual Cost

$350

$750

$250

Running a larger company comes with additional risk and increased premiums. Here are some quote examples for larger company general liability policies:

 

Utilities Contractor

Metal Manufacturer

Online Amazon Store

State

OK

FL

TX

Annual Revenue

$2,400,000

$4,000,000

$18,000,000

Per Occurrence Limit

$1,000,000

$1,000,000

$1,000,000

Aggregate limit

$2,000,000

$2,000,000

$2,000,000

Deductible

$0

$2500

$0

Monthly Cost

$3,723/mo

$2,193/mo

$191/mo

Annual Cost

$44,680

$26,316

$2,300

For more information on how insurance pricing works and how to calculate your insurance policy rates, check out our article, “How Much Is A Business Insurance Policy?

How To Get A General Liability Quote From LandesBlosch

Get a quote online

The quickest way to get a quote from us is to go online. We will quote up to 10 insurance companies instantly and help you compare each option.

Schedule a call

Schedule a call with a risk advisor who is experienced in your industry. You can ask your advisor any insurance question and they will guide you through the process of obtaining commercial insurance for your business.

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