What Does Liability Insurance Cover?

Many small business owners have a general liability insurance policy to help protect their companies. You may be asking yourself, 'What does general liability cover?' This insurance helps protect your business from claims that it caused: Lesiones corporales Daños a la propiedad Personal injury, like libel or slander Más información sobre What Does General Liability Cover .

What Types of Incidents Are Covered Under General Liability?

General liability insurance helps protect your small business from claims that it caused bodily injuries and property damage. These risks can come up during normal business operations. They can get expensive for small businesses and many don’t have the resources to cover a liability claim. Más información sobre What Does General Liability Insurance Cover for Business and get a free quote today.

When Should You Consider Buying General Liability Insurance?

Seguro general contra terceros is an essential coverage for many business owners. You may want to consider getting coverage if you: Have a store, office or building that’s open to the public, clients or vendors Handle or work near client property Advertise or create marketing materials for your business Use social media personally or professionally You can easily get a business insurance quote .

What Does General Liability Insurance Cover?

What Is General Liability Insurance Coverage?

One friend asks another what does liability insurance cover?

General liability insurance, also known as commercial general liability, is a type of small business insurance that can help protect businesses from claims of:

Bodily injuries
Daños a la propiedad
Personal injury, like libel or slander
Advertising injury
Copyright infringement
Reputational harm

General liability insurance also helps financially protect your business if you’re sued. Your GLI policy can help pay for your legal fees and settlement costs.

Without general liability insurance coverage, your business would have to pay out of pocket for costly claims that could come up during normal business operations.

What Does a General Liability Insurance Cover?

Two workers discussing general liability insurance coverage

A general liability policy helps cover claims that can come up during normal business operations, such as:

Lesiones corporales

General liability coverage can help pay for medical expenses associated with a bodily injury that your business may have caused, like a customer slip and fall.

Daños a la propiedad

If an employee accident causes property damage, like breaking a client’s windows while working at their home, general liability insurance can help. This coverage can help cover the repair or replacement costs to fix the windows.

Daños Personales

General liability can help pay for your business’ defense costs if you’re sued for personal injury that isn’t physical, like libel or slander.

General Liability Coverage Examples

A store owner discusses with a mother and son how commercial liability insurance coverage protects her business

Examples of general liability insurance coverages include:

Product liability coverage can help protect your business from claims that a product you made or sold caused bodily injury or property damage to someone else’s belongings.¹ We offer product liability insurance as a part of your general liability insurance policy.
Product recall insurance helps you manage a product recall and protects you from the financial impacts. Product recall insurance is an endorsement you can add on to your business insurance policy.
Contractual liability coverage can be added on to your general liability insurance policy. Contractual liability insurance coverage helps cover claims related to contract issues.

What Costs Does General Liability Insurance Cover?

What is general liability insurance and what does it cover? General liability insurance, also known as commercial general liability insurance or el seguro de responsabilidad comercial, helps cover:

Costs for property damage claims against your business
Medical expenses if a customer gets injured at your business
Administrative costs to handle covered claims
Court costs, judgments and settlements for covered claims

Your general liability insurance can help pay for claims up to your coverage limits, or your general aggregate. Your general aggregate for insurance, sometimes called the “aggregate limit of liability,” is the maximum amount of money your insurance company will pay out for claims during a policy period. So, if you have a $1 million aggregate limit on your general liability insurance policy, your insurance will pay for claims up the maximum amount of $1 million during the policy term.

How Much Coverage Does a Typical General Liability Insurance Policy Provide?

Your general liability insurance can help pay for claims up to your coverage limits, sometimes referred to as your per-occurrence limit and your general aggregate limit.

Per-occurrence limit is the maximum amount of money that an insurance company will pay for any one claim. For example, if you have a GLI policy with a $1 million per-occurrence limit and a $2 million general aggregate limit and you file a claim valued at $1.1 million, your insurance would pay the $1 million because of the occurrence and your business would likely pay the remaining $100,000. The remaining amount left in your policy period then decreases from $2 million to $1 million.
General aggregate limit, sometimes called the “aggregate limit of liability,” is the maximum amount of money your insurance company will pay out for claims during a policy period. So, if you have a $1 million aggregate limit on your general liability insurance policy, your insurance will pay for claims up the maximum amount of $1 million during that specific policy term.

What Does General Liability Insurance Not Cover?

Be aware that general liability insurance doesn’t cover every kind of claim. For some, you’ll need different types of coverage to give your business more protection.

A general liability insurance policy won’t help your business with:

Commercial auto accidents that you or your employees cause while driving for work. A el seguro comercial para automóviles policy can help you cover the cost of damages. If your small business doesn’t have company-owned vehicles, hired and non-owned auto coverage could help, too. Be aware that many states require certain types and amounts of auto coverage, like bodily injury liability coverage or property damage liability coverage.
Employee injuries or illnesses due to their work. Workers’ compensation insurance gives your employees benefits to help them recover from a work-related injury or illness. For example, it can help cover an employee’s medical bills and ongoing care expenses.
Damage to your own business property. You’ll need to get a commercial property insurance policy to help protect your owned or rented building and business equipment.
Mistakes or errors in the professional services given to customers. Professional liability insurance can help cover your legal costs if a client sues you for a mistake in the services provided, such as bad advice given to a client or faulty workmanship.
Claims that cost more than your liability limits. You’ll need a commercial umbrella insurance policy for expensive claims. This extends the limits of certain liability insurance policies.
Illegal acts or wrongdoing that you or your employees did purposefully can result in your business being held legally responsible.

The Dangers of Not Having General Liability Insurance

State laws generally don’t require you to carry general liability insurance. However, not having coverage could put your business at financial risk.

Judgments, settlements, legal defense fees and court costs can also be extremely expensive. If someone files a claim against your business:

You’ll need legal counsel, which can cost between $100 per hour to $500 per hour.²
You may need to spend several thousands of dollars, even if the lawsuit gets dropped.
When you add the cost of administrative work, legal secretaries and any settlements or judgments, your business could face a bill totaling hundreds of thousands of dollars. The right general liability insurance policy can help your business cover these costs.

You may also find that businesses will want to make sure you have the minimum coverage they require before agreeing to work with you. They want to make sure your business can survive a liability claim and continue to do what they hired you to do. So they may ask you to provide proof of insurance, known as a certificate of liability insurance.

General Liability Insurance Coverage FAQs

Is General Liability Insurance Required by Law?

Although general liability insurance isn’t typically required by law to have, your business might be required to carry it as a part of a lease agreement or contract. It’s a good idea to have general liability insurance because without it, you’d have to pay out of pocket for costly claims that could put you out of business.

Who Does General Liability Insurance Protect?

General liability insurance can help cover claims that your business may have caused:

Third-party bodily injury
Third-party property damage
Reputational harm
Advertising injury

What Damages Does Commercial General Liability (CGL) Cover?

A commercial general liability insurance policy can help cover the following types of claims:

Third-party bodily injury: If a customer gets hurt after slipping and falling in your store, they can sue your business. Your GLI policy includes bodily injury liability coverage, so it can help pay for their medical bills.
Third-party property damage: If you or your employees work at a client’s house and accidentally damage one of their pieces of furniture, your GLI policy has you covered. Property damage liability coverage can help pay for repair or replacement costs if your business damages someone else’s belongings.
Reputational harm: A client can sue your business for libel or slander because of something you or your employees said. If this happens, general liability insurance can help cover your legal costs to defend your business.
Advertising injury: General liability insurance can help your business if you get sued for copyright infringement. For example, a photographer can sue you if you use their photo in your ads without permission.

Does General Liability Insurance Cover Theft?

General liability insurance doesn’t cover theft or burglary, but a commercial property insurance policy does. Commercial property insurance helps protect your business’ physical assets, like your building, equipment, tools, inventory, furniture and personal property.

Is General Liability Worth It?

A general liability insurance policy adds an extra layer of financial protection if your business is sued because of an unexpected accident. Accidents can happen during normal business situations. If you or your employees meet with clients, work on off-property or advertise for your business, you face risks every day. Without general liability insurance coverage, you’d have to cover the costs for claims and lawsuits out of your own pocket.

What Are the Risks of Not Having General Liability Insurance?

Legal fees and settlement costs can add up quickly if you don’t have business insurance. Without general liability insurance, your business’ financial future is at risk if an accident happens during normal operations. Even during normal business operations, your business is at risk for being sued due to a third-party bodily injury, third-party property damage, libel or slander – even if your business is not at fault.

Get the Right Liability Coverage for Your Business

Many insurance companies offer general liability insurance, but not all of them specialize in small businesses. We have over 200 years of experience and have helped over 1.5 million small business owners. And we can do the same for you.

Whether you have questions about different types of insurance or need help with a claim, we’ve got your back. Our specialists are here for you and can help you get the right coverage for your business.

Última actualización: 3 de mayo de 2024

¹ Product liability insurance coverage may not be available to all classes.

² Lawyers.com, “How, and How Much, Do Lawyers Charge?”

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