General Liability Insurance Explained
A plain-English guide to general liability insurance: what it covers, what it costs, and when your business needs a higher limit.
What general liability insurance covers
General liability (GL) insurance is the foundation of every business insurance program. It pays for third-party bodily injury, third-party property damage, and 'personal & advertising injury' claims — things like libel, slander, and copyright infringement in advertising.
A customer trips on your welcome mat and breaks a wrist: GL. A subcontractor damages a client’s conference table: GL. A competitor sues you over a tagline: GL.
What it does not cover
GL does not cover professional mistakes (that requires E&O), employee injuries (workers’ comp), auto accidents (commercial auto), or damage to your own property (commercial property).
Typical limits and cost
Most small businesses buy a $1M per-occurrence / $2M aggregate policy. That’s often the minimum required to sign commercial leases and vendor contracts. Median cost across our sample was $42–$68 per month for a low-risk service business.
When to raise your limit
Consider $2M/$4M or an umbrella if you serve enterprise clients, host public events, or operate in a state with high jury verdicts (California, New York, Texas, Florida).
Frequently asked questions
Is general liability the same as errors and omissions?
No. GL covers physical harm and property damage. E&O (professional liability) covers financial harm from your professional advice or services.
Do sole proprietors need general liability?
If you interact with clients, vendors, or the public, yes. Sole proprietors have unlimited personal liability, making GL especially important.
Bottom line
Understanding general liability insurance explained is one of the highest-leverage things you can do for your financial future. Bookmark this guide, share it with a friend, and use the calculators linked below to run the math on your own numbers. Money decisions are rarely urgent, but they compound — so a good decision today easily becomes an outsized win a decade from now.
Reader comments (3)
This finally cleared up something my previous advisor kept hand-waving. Bookmarking.
Would love a follow-up piece on how this changes for self-employed households.
Really appreciate that you cited primary sources — most sites don’t.