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General liability insurance is a kind of business insurance that helps protect a business financially if it harms or is accused of harming a person or their property.
Businesses typically need commercial general liability insurance coverage. All major business insurance companies sell it, either on its own or as part of a business owner’s policy.
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What does general liability insurance cover?
General liability insurance covers legal and settlement costs if someone accuses your business of causing property damage, personal injury or harm to someone’s reputation. It can also cover medical payments for injuries that happen on your property, even if a legal claim isn’t filed.
Specifically, commercial general liability insurance policies can pay out in cases of:
Third-party bodily injuries that occur on your property or as a result of an interaction with your business or employees. (This does not include injuries sustained by employees.)
Third-party property damage, or damage to someone else’s property caused by your business or its employees.
Personal and advertising injury. If your business says something publicly that prompts someone else to sue you for copyright infringement, libel or slander, general liability coverage can pay for your legal expenses and damages, if any.
General liability insurance policies also typically include some product liability insurance coverage, which provides protection against claims that a product your business manufactured, delivered or sold caused harm to a person or property. If this coverage is excluded, you may want to purchase a policy separately.
Usually, general liability insurance policies must be in place when the injury or damage happens in order to protect your business. But they can provide retroactive coverage even after you stop paying premiums.
How do you get general liability insurance?
All business insurance providers typically sell general liability insurance. It’s often packaged with business property insurance and business income insurance in a business owner’s policy. If you also need property and income protection, a BOP is a good choice that may help you save money.
Whether you choose to buy general liability insurance by itself or as part of a BOP, NerdWallet recommends getting quotes from several different providers so you can find the best coverage at the best price.
Start your search here:
Next Insurance is a startup that sells business insurance online with packages tailored to many different industries. Chubb is more than a century older than Next, but it also sells general liability insurance, BOPs and a few other coverage types to small-business customers online.
If you only need temporary coverage: You can buy a policy online by the day, month or event from Thimble. Thimble is a good option for businesses who want coverage mainly to comply with contractual requirements.
If you want to work with an insurance agent: State Farm agents sell general liability insurance and BOPs among other business insurance products. State Farm agents can only sell State Farm insurance policies, so you won’t be able to compare multiple quotes.
You can also seek out an independent agent or broker, who might find you a policy from a provider like Hiscox or The Hartford. Independent agents shop around on your behalf, aiming to find you the best coverage at the best price.
What isn’t covered by general liability insurance?
Businesses often need several types of business insurance. Typically, general liability insurance does not protect business owners in cases of:
Harm that results from inadequate performance. Professional liability insurance, also called errors and omissions insurance, can protect a business that performs a service — think accountants, lawyers, doctors and architects — if they’re sued by a client who thinks they were negligent or made a mistake that resulted in harm.
Injuries your employees suffer on the job. The part of a general liability policy that covers bodily injury liability only applies to third parties, not to employees. Workers’ compensation insurance pays for medical costs, physical therapy and lost wages while an employee recovers from a workplace injury.
What are the typical general liability insurance limits?
General liability insurance policies typically include two numbers: the per-occurrence limit and the aggregate limit.
The per-occurrence limit is the maximum amount the insurance company will pay out for a single claim. This includes both legal and settlement costs. A typical general liability policy includes a per-occurrence limit of $1 million.
The aggregate limit is the total amount the insurer will pay out in a single year. A typical general liability policy includes an aggregate limit of $2 million. The aggregate limit refreshes every year if you have an occurrence-based policy.