What is General Liability Insurance?

What would happen to your business if a customer slipped on the floor and injured themselves, or an on-site mishap ruined your client’s property? Chances are you’d be sued for damages. Without sufficient revenue or savings, you’d be on the hook for up to millions of dollars in compensation — unless your business is protected by General Liability Insurance.

Without General Liability Insurance, your business would be held liable for:

  • Damage to a customer’s or client’s property
  • Physical harm or bodily injury sustained by a customer or client
  • Damage to the reputation of another party

It’s reasonable to assume that you’re not in the business of purposely harming customers or destroying their property, but accidents happen. No matter how careful you are, some things just can’t be prevented.

Unfortunately, you can still be held liable for damages and injuries sustained following the unexpected.

General Liability Insurance shifts that liability to your insurer and away from you and your business. Your GL policy pays for the costs borne by the injured party — such as repairs or medical expenses — and the defense of your business in the event of litigation.

In essence, General Liability Insurance can keep you in business in situations when you’d be otherwise forced to close and liquidate.

General Liability Insurance protects you and your business from being held financially responsible for damage caused to another person’s property, body, or reputation.

General Liability Insurance covers the cost of:

  • Property damage
  • Medical expenses caused by bodily injury, including death
  • Reputational harm
  • Legal fees
  • Judgments and settlements incurred as a result of litigation

It does not protect you from:

  • Damage done to your business, including your employees — for that, you would need a Business Owners Policy 
  • Errors, omissions, mistakes, and negligence stemming from your profession — this coverage is provided by Professional Liability Insurance. 

Because General Liability Insurance covers physical damage to people and property, it’s especially important for businesses that frequently interact with customers and clients on a face-to-face basis.

The minimum amount of General Liability Insurance coverage you need varies depending on your industry, customer demands, and your comfort level.

Generally, customers and clients expect or require businesses to carry high limits in the amounts of $500,000, $1,000,000, or even $2,000,000.

Even if you’re not required to carry high coverage limits, remember: You don't need to be a millionaire to get sued like one.