Best General Liability Insurance of 2024

What is general liability insurance?

“General liability insurance” is a type of business insurance that helps protect businesses from potential claims due to injuries or property damage.

If someone or something is damaged as a result of your business operations, this insurance can provide coverage.

It typically covers legal costs associated with defending the claim and helps pay any settlements or judgments against you as well as medical bills for visitors on your premises.

Commercial general liability (CGL) policy payouts can also cover the cost of repairing customer property that’s accidentally damaged by someone working for your company.

What is the difference between professional liability and general liability?

General liability insurance covers claims related to bodily injury, property damage, advertising injury, libel, and slander. Professional liability typically does not cover these types of claims. Instead, it covers claims resulting from negligence, malpractice, mistakes made by employees, or bad advice offered by your company.

Professional liability, also known as errors and omissions insurance, is particularly common among white-collar workers like doctors, lawyers, consultants, and companies that offer advice.

How does general liability insurance work for a small business?

General liability insurance protects your businesses in case you are held legally responsible for bodily injury and property damage to third parties who are on your premises or who have been affected as a result of business operations.

For example, imagine that you own a small landscaping business and one of your employees accidentally damages a client’s expensive outdoor furniture while working on their property. Now, imagine that the client demands compensation for the damage, and you are found to be liable. Without general liability insurance, you would be responsible for paying the client out of pocket.

However, with general liability in place, your insurance policy typically would cover expenses related to legal defense and settlements or judgments that result from the client’s claim.

Depending on the specifics of your policy, general liability insurance may also cover other types of claims, such as those related to advertising injury or product liability as well as pay for lost wages if someone alleges slander or libel against your company.

While this is just a small-scale example, it’s easy to see how the damages could be much worse depending on your company’s activities. Therefore, it’s a good idea to assess your risk and understand how much coverage you may need.

Ultimately, this type of coverage is made to help protect the financial health and reputation of any size business should an unforeseen incident occur.

What happens if you don’t have general liability insurance?

While you are not legally required to carry general liability insurance, it can save your business if someone is injured or their property is damaged during business operations. Without general liability coverage, you run the risk of facing significant financial costs and liability if an incident or accident occurs. This can include expensive legal fees to defend yourself in court and protect your assets and reputation.

Moreover, even if the case does not go to court, unpaid medical bills for visitors injured on premises can result in lawsuits and further financial strain on your business. If found liable for damages caused by negligence or libel/slander resulting from advertising injury, judgments against your business may require payments far beyond what you can afford. This could ultimately result in bankruptcy and the closure of your small business.

That said, let’s look at what you would be covered for if you were to take out a general liability insurance policy.

What does general liability insurance cover?

A general liability policy typically provides coverage for:

• Property damage & theft
• Physical injury to the body
• Personal injury (such as slander or libel)

As with any type of insurance, there will be coverage limits and exceptions depending on the policy you choose. However, this list is typically applicable to all general liability insurance.

Here is a look at that list in greater detail.

Property damage & theft

General liability insurance can cover damages to physical property owned by the policyholder, such as buildings, equipment, inventory, and the theft of money or other valuable items from the premises. Additionally, it can cover costs for replacing or repairing damaged property as well as lost income due to business interruption.

Bodily injuries that your business may have caused

If someone is injured on your property, General liability insurance can provide coverage for associated medical expenses. This includes coverage for third parties not employed by the company. These could be visitors to your premises, customers, clients, or passersby who sustain an injury on your property or as a result of your business operations. Some examples include slip-and-falls, accidental fires or explosions, punctures, and other types of accidents.

Personal injury

Personal injuries refer to non-physical damages such as libel, slander, copyright infringement, and false advertising. General liability plans can protect you from damages if a third party believes that your business has caused them harm in any of these areas. For example, if someone accuses your business of libel or slander, general liability can help cover legal fees and any resulting settlements or judgments.

These are just some of the ways that general liability insurance can help protect your business from potential claims. It’s important to review your policy carefully so you have a clear understanding of what is and isn’t covered. This can help you make informed decisions about protecting your business from risks and liabilities.

What does general liability not cover?

General liability policies vary by provider, industry, location, and other factors.

Each plan has different items it won’t cover, so we recommend reading the fine print before choosing a small business insurance plan.

That said, here are some common things that general liability insurance will not cover:

• Auto accidents caused by you or your employees
• Employee injuries or illnesses
• Mistakes or errors in the professional services given to customers
• Claims that cost more than your liability limits
• Intentional acts (including the illegal acts or purposeful wrongdoing of you or your employees)
• Lost expenses for cancelled trips relating to business travel

Depending on your plan, general liability may also not cover costs resulting from an interruption in your operations. For protection against costs and lost profits, you may need a separate policy. Likewise, damages resulting from flooding and certain other perils may require specialized coverage like commercial property insurance.

For injuries to employees, business malpractice, or acts of sabotage, you will need additional coverage such as workers comp, and professional liability insurance. For movable merchandise or equipment used off-site, you may also need supplemental coverage such as Inland Marine Insurance.

Who needs general liability insurance?

Every business should carry general liability insurance.

That’s because nearly every business presents some type of risk to the public. Even for businesses with minimal risks such as a personal trainer, the costs of lawsuits these days make it extremely costly to pay out of pocket.

Since general liability can help if someone gets hurt while visiting your property or something is damaged, businesses like stores, restaurants, and offices stand to benefit greatly from general liability insurance.

For example, as a fitness coach, you would want to take out a general liability policy for coverage against medical bills and legal defense costs relating to bodily injury. You would be protected from financial ruin if a client gets hurt or injured at your facility.

Keep in mind, however, that some providers have certain industries that they refuse to cover. Discuss your business and needs with an agent to find a provider that works for you.

How much does general liability insurance cost?

In general, small businesses could expect to pay between $750 and $3,000 per year for a general liability policy.

The cost of general liability insurance will depend on the type and size of your business and the amount of coverage you need.

Get general liability insurance for as low as $21.25/month*

*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business.
Averages based on July-September 2023 data of 10% of our total policies sold.

To give you a better idea of how much general liability insurance costs, we ran a simulation through Simply Business’s online quote builder to determine the cost of general liability insurance for an imaginary clothing retailer in Los Angeles. As an LLC with one employee, $250,000 in annual revenue, and $100,000 in annual payroll costs, the business qualified for coverage of $1 million per occurrence and $2 million in aggregate coverage for around $425 to $500 per year.

While this is just an example, it’s easy to see that general liability plans can be quite affordable versus the amount of protection they can offer.

Keep in mind that costs vary depending on many factors, including location, industry, revenue, time in business, and the number of employees. We always recommend working with an insurance professional to find the right coverage for your business.

What factors affect the cost of general liability insurance?

The major factors that determine the cost of general liability insurance include:

• The type of business & associated risk
• The business location
• The business’ claims history
• The size of your policy
• The size of your business
• The value of the protected property

Your industry

Different industries have different levels of risk, and this is reflected in the premiums businesses pay. A business in a high-risk industry, such as construction, contracting, or manufacturing, typically has higher premiums than one in a low-risk industry, like retail or consulting. Consider the potential costs of any claims arising from your business activities when planning the cost of a policy.

Your location

Location can also be a significant factor in the cost of general liability insurance, as businesses in some states or regions may face higher liabilities than others. Additionally, insurance companies have different “appetites” for protecting against risk in different geographic markets, and that also affects premiums. Check with a local agent for more information.

Your claims history

Insurance companies will look at your claims history to determine how likely you are to make a claim in the future. If you have had several claims in the past—particularly in the past five years—they may charge higher premiums as they consider you to be more of a risk.

Your policy size

The limits you choose for your policy also affect the cost of coverage. Policies with higher limits usually cost more, so review your coverage limits to ensure they are adequate. Also, keep in mind that these costs may be reduced if you are willing to accept higher deductibles.

Your business size

The size of your business also plays a role in determining the cost of general liability coverage. Smaller businesses are typically considered to have lower risk and will often have lower premiums. Larger companies have more assets to protect and may represent a greater risk to the public.

How can you reduce general liability insurance costs?

General liability insurance is an important part of protecting your business, so it’s worth investing time and effort into finding a policy that meets your needs and budget.

Compare quotes and look for discounts to get the best coverage at the most affordable rate.

Keep your risks low

One of the best ways to lower your premium costs is to reduce the risks associated with your business. This could include installing fire alarms and smoke detectors, taking safety classes, or ensuring that all employees are properly trained in the use of equipment.

Learn from previous claims

If you have made a claim in the past, review what led to the claim. Think about whether there are steps you can take to prevent similar issues from happening again. Learning from previous incidents and claims can help you implement risk prevention policies to lower your premium costs.

Pick the right limits and deductible

Increasing your deductible can reduce the cost of your insurance. A higher deductible means you will be responsible for paying a larger portion of any claims, so your premium costs will be lower. Only increase your deductible if you can cover the additional expense in the event of a claim.

Bundle policies

Some insurance companies offer discounts when you bundle multiple policies together. For example, you may be able to get a discount if you purchase both general liability insurance and business personal property insurance from the same company. Many providers allow these and other coverages to be packaged together in business owner policies that offer companies a wide range of protections.

Shop around

It’s always a good idea to shop around for insurance and compare quotes from different companies. This will give you an idea of what is available in your area and help you find the most affordable coverage. You can also speak to an insurance agent or broker who can help you understand the different policies and determine the best option for your business.