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Edited by: Kimberlee Leonard
 and Reviewed: Kimberlee Leonard

What Is General Liability Insurance? All You Need to Know 

Author: | Jun 18, 2023

Editorial Note: We earn a commission from partner links on Go Sifter Advisor. Commissions do not affect our editors’ opinions or evaluations.

General liability insurance, also known as business liability insurance, offers general insurance protection for small businesses of all types. Many responsible business owners ask the questions, “What is general liability business insurance?” and “What does general liability cover?” 

Getting general liability insurance can protect your business in more ways than one, and the ways in which it can protect your business may surprise you.

You may not even realize you need general liability insurance until you hit a snag in your business operations, and often, that can be too late. We’ll discuss the costs, what it covers, and who needs it in this piece. Read on to ensure that you have the right insurance coverage for your situation.

What Is General Liability Insurance?

General liability insurance protects your business from claims that arise when your company is responsible for certain damages. It can cover medical expenses and attorney fees for a variety of legal issues that can arise, such as bodily injury, property damage, libel, and slander.

What does general liability cover, also called commercial general liability insurance cover, exactly? In addition to property damage and physical injuries, general liability insurance can also cover defense costs and personal and advertising injuries.

You may also wonder, “Is general liability insurance required by law?”

No, the law doesn’t generally require you to carry general liability insurance. However, a client or other entity (including landlords) may require you to carry this coverage before you get the job or before you rent from them.

How Much Does General Liability Insurance Cost? 

It’s impossible to give you an exact figure for your particular business because it depends on your specific business needs, including the type of work you do, your location, the number of employees you employ, the size of your business, your industry type and the amount of coverage you need. 

However, in general, you can safely plan to spend between $40-$100 per month. Talk with a local insurance agent for the most accurate information about the cost of coverage for your particular business and situation.

What Does General Liability Insurance Cover? 

Take a look at some examples of how general liability insurance might help you in several circumstances. General liability insurance covers the following, and we’ve also included some general liability insurance examples:

  • Bodily injury/medical expenses: Bodily injury can cover medical costs if someone injures themselves on your property. For example, if you own a small grocery store and a customer slips on a banana peel while shopping in the store, they may choose to sue you over the incident. If the individual who slips breaks a leg, your insurance may cover the costs of X-rays, doctors’ fees, and/or surgery. Your general liability policy may cover third-party claims like this. Many accidental injuries could occur in a wide variety of settings (to others besides employees or you, the business owner). Medical expenses can cost thousands, so it’s important to make sure you have the right insurance coverage. Accidents happen!
  • Property damage: If property damage occurs through your own or your employees’ actions, your general liability insurance policy may help cover the costs associated with the damage. For example, let’s say you own a wedding planning business. Your employee lights candles on the tables prior to a wedding reception. The wedding table place cards on the tables catch fire, destroying a large part of the wedding venue. The wedding venue sues for damages. The business owner can tap into their general liability insurance to cover the cost of the damage. 
  • Personal and advertising injury: General liability can pay for your business’ defense costs if your business gets sued due to libel or slander. Your general liability policy may also protect you if your advertisement or marketing materials copy a third party’s copyrighted materials. 
  • Defense costs: Defense costs cover charges related to defense against a lawsuit. These charges include lawyer costs, court fees, filing legal paperwork, and other costs related to your defense. Generally, the insurance company provides the legal counsel; you don’t pick your own.
  • Temporary staff member actions: General liability insurance may also extend to temporary staff members as well, depending on your insurance company. For example, let’s say a temp worker at your business spreads a rumor about another rival company at a restaurant. The executive of the rival company, who is sitting one table over, hears it. The employee’s actions could cause the executive to sue your company, even if it comes from a temporary employee.

Who Requires General Liability Insurance? 

A number of small businesses may want to consider general liability insurance. Generally, you need general liability insurance if you: 

  • Meet with clients on your property
  • You or your employees visit a client’s workplace
  • Use a customer’s property
  • Advertise or market your business
  • Use third-party locations for business
  • Require insurance coverage as an industry standard or require it for bids
  • Have a landlord who contractually requires it

If any of these activities sound like something your business does regularly, consider getting general liability insurance. 


General liability insurance doesn’t cover every type of loss that your business may incur. For example, general liability insurance will not cover you in certain situations, such as in the case of employee injuries, intentional acts, professional mistakes, etc. It’s a good idea to consider describing your business to your insurance company to ensure that you obtain the right type of insurance for your situation. Shop around to compare rates, terms, and benefits and reassess every year. The Small Business Administration is a good resource to check in with.

Ready to make decisions about your business insurance coverage? After understanding general liability insurance fundamentals, explore why having business insurance is crucial.

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