General liability insurance: what it covers and what it doesn't
General liability insurance pays when your business is responsible for injuring someone or damaging their property, or is sued for things like libel, slander or false advertising. It also pays for your legal defense, even if the claim has no merit. It does not cover your own employees' injuries, your vehicles, your own property or mistakes in professional advice; those need other policies.
Published by Marcus L. Barber, former licensed Maryland property and casualty producer (2010–2012)Reviewed by Marcus L. Barber on Updated This guide is general education, not advice for your situation. We're an independent publisher, not an insurer or agent, and we may earn a commission from partner links. How we make money.
Key points
- Covers bodily injury, property damage, and personal and advertising injury to others, plus defense costs.
- Products and completed operations coverage applies when your product or finished work causes harm later.
- Excludes employee injuries, vehicles, professional errors, employment claims and damage to your own work or property.
- Contracts commonly ask for $1 million per occurrence and $2 million aggregate.
What general liability covers
A commercial general liability (CGL) policy covers claims from people outside your business. The Texas Department of Insurance describes the main parts, and most policies also include medical payments:
| Coverage | Example |
|---|---|
| Bodily injury | A customer slips on a wet floor in your shop and breaks a wrist. |
| Property damage | Your painter knocks over a ladder and cracks a client's window. |
| Personal and advertising injury | A competitor sues over a claim in your ad, or someone alleges slander. |
| Products and completed operations | A product you sold, or work you finished, injures someone later, away from your premises. |
| Medical payments | Small medical bills for an injured visitor, regardless of fault. |
The policy pays settlements and judgments up to your limits and pays to defend you. The National Association of Insurance Commissioners (NAIC) notes it can cover compensatory damages and pain and suffering.
What it doesn't cover
| Not covered | What covers it instead |
|---|---|
| Injuries to your employees | Workers' compensation |
| Accidents in business vehicles | Commercial auto |
| Mistakes in professional advice or services | Professional liability (E&O) |
| Harassment, discrimination, wrongful termination claims | Employment practices liability (EPLI) |
| Your own building, equipment and inventory | Commercial property or a BOP |
| Data breaches | Cyber liability |
Texas regulators list other common exclusions: damage to your own product or work, product recalls, pollution, and most liability you take on by contract (with some exceptions).
Occurrence vs. claims-made
- Occurrence policies cover injury or damage that happens during the policy period, no matter when the claim is filed.
- Claims-made policies cover claims made and reported while the policy is active. If you cancel, you may need "tail" coverage (an extended reporting period) to report later claims. Texas notes the typical window is 30 or 60 days, with optional periods of 1, 3 or 5 years or unlimited.
How much coverage to buy
General liability limits are usually shown as two numbers: a per-occurrence limit and an aggregate (the most the policy pays in a year). $1 million per occurrence and $2 million aggregate is a common contract minimum; the City of San Diego's contracting checklist, for example, lists those minimums. Check your lease and client contracts first. If you need more, a commercial umbrella policy adds limits on top.
What it costs
Premiums are usually based on estimated sales or payroll and adjusted after an audit, and they depend heavily on your industry. The NAIC gives the example of a toy maker paying up to $3 per $1,000 of sales versus $1.50 for a florist. Broker Insureon reports a median of about $45 a month among its customers, who are mostly very small businesses. See what small business insurance costs.
Often the cheapest way to buy general liability is inside a business owner's policy, if you qualify.
Proving you have coverage
Landlords and clients will ask for a certificate of insurance, and sometimes to be named as an "additional insured," which requires an endorsement to your policy. See certificates of insurance and additional insureds.
Common questions
What does general liability insurance cover?
Injuries and property damage your business causes to other people, claims of libel, slander or false advertising, and injuries caused by your products or completed work. It pays settlements or judgments up to your limits plus legal defense costs.
Does general liability cover employee injuries?
No. Injuries to your own employees are covered by workers' compensation insurance, which most states require once you have employees.
What is the difference between general liability and professional liability?
General liability covers physical injury and property damage you cause, like a customer slipping in your shop. Professional liability covers financial harm from your advice or services, like a client losing money because of an error in your work. Many service businesses need both.
How much general liability insurance do I need?
Many small businesses carry $1 million per occurrence and $2 million aggregate, partly because leases and contracts often require it. Riskier businesses may add a commercial umbrella for more.
How this guide was made
We drafted this guide with help from AI writing tools, working from the sources listed below. Every fact was checked against those sources, and Marcus L. Barber read and reviewed the full page, including its title, description and FAQs, before it was published. AI tools don't decide what we publish; a person does. Our editorial standards.
Sources
- Commercial general liability insurance, Texas Department of Insurance
- Small business insurance, National Association of Insurance Commissioners
- Get business insurance, U.S. Small Business Administration
- Purchasing & Contracting insurance checklist, City of San Diego
- How much does small business insurance cost? (broker data), Insureon
- Certificates of insurance FAQ, Texas Department of Insurance