For your best business protection and savings, we recommend bundling GL with some other important coverages on one Business Owners Policy!
General liability insurance is essential regardless of which industry your business belongs to. You can use it to cover the cost of lawsuits, provide indemnification for losses and injuries caused by your business, and gain the trust of customers or clients. Our discussion for today is a comprehensive guide on general liability insurance. You will know its definition, history, cost, and more.
Also read:
Sometimes used interchangeably with public liability insurance, commercial general liability insurance is an insurance product that provides funds if your business or its employees is liable for the injuries or damaged property of third parties.
Depending on what kind of business you own, a CGL policy might be required before a license is issued or you’re allowed to provide a service. For example, if you’re running a construction company, the authorities might not issue a building permit if you don’t have commercial liability insurance ready and waiting.
General liability business insurance might also be required if you plan to get a mortgage and rent or lease a property.
Note that general liability insurance doesn’t only protect your business but also helps it grow. A lot of clients or customers will ask if you’re covered by general liability insurance. This is especially true if your business is in the professional services industry.
Also read:
The policyholder is the one who owns the general liability insurance and whose name is reflected in its terms. In other words, you.
You and other entities protected by general liability insurance are considered insureds.
Third parties in the language of general liability insurance pertain to customers, visitors, and other entities who are not part of your business’s organizational structure and payroll.
In the terms of general liability insurance, bodily injury means any physical harm your business inflicts to a third party. For example, cuts, burns, lacerations, and fractures. This must be unintentional in nature.
Property damage pertains to harm your business unintentionally inflicts on a third party’s belongings.
A coverage territory is the place where the use of your general liability insurance is limited. For example, if it’s stated that the coverage territory is in the USA, then general liability insurance can only take care of claims filed therein.
Policy limit is the amount of coverage you can get from general liability insurance. In simpler terms, it pertains to how much insurance money general liability insurance can give you in order to pay for settlements or cover defense costs.
A deductible is an amount you have to give the insurance company after it has approved your general liability insurance claim. General liability insurance deductible is $250, $500, $1,000, $1,500, or $2,000.
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You’ll find two kinds of general liability insurance for your business-standard and broad form. The following sections discuss what these are.
The standard general liability insurance is the earliest variety of commercial general liability policy. It only covers personal injury claims and property damage claims.
The coverage it provides can't be customized or be introduced with endorsements. Nowadays, insurance companies sell this to customers looking for the cheapest coverage for their business.
Broad form general liability insurance is a comprehensive version of commercial general liability policy. This doesn’t only protect your business against claims for bodily injury or property damage but also other business exposures such as reputational harm and advertising injuries, liability to rented premises, and liability over products and completed operations.
Broad-form general liability insurance provides advertising injury coverage, which covers costs if your business committed or allegedly committed slander, libel, copyright infringement, and invasion of privacy.
Your business will rent a space if not now, then in the future. There’s the possibility of your rented space getting damaged because of a fire due to employee error or an accident.
Because of this, broad form general liability insurance comes with rented premises liability coverage. Rented premises liability coverage will indemnify the owner if a space rented to you is damaged by fire.
Some insurance companies offer a broad form general liability insurance with non-owned/hired auto liability coverage. Non-owned/hired auto liability insurance will take care of costs if your business hired or borrowed a vehicle and such vehicle caused an accident resulting in the injuries or property damage of third parties.
General liability insurance works the same way regardless of which insurance company underwrites it. Here’s a quick summary of the functions of general liability insurance:
Cover the medical treatment of a claimant who holds your business liable for his or her bodily injuries
Refund the losses of the claimant who holds your business liable for his or her damaged property
Pay for attorney fees, investigation fees, court fees, and other legal defense costs if your business faces a lawsuit for bodily injury or property damage
Cover settlements and defense costs if your business is liable for slander, libel, and copyright infringement (only if advertising injury coverage is added to its terms)
Refund the losses of the landlord if his property got damaged by a fire due to your business’s negligence (this applies if your general liability insurance has rented premises liability coverage)
Cover the treatment and refund the loss of victims if the vehicle your business hired or borrowed caused an accident (general liability insurance will only have this function if non-owned/hired auto liability coverage is added to its terms)
Carriers underwrite general liability insurance as a claims-made policy. In simple terms, general liability insurance can only provide coverage if you request to use it after a covered peril happens. Even if a claim happened during its policy period, general liability insurance can’t help you if it has already expired.
The general liability insurance of most commercial insurers has a $1 million-$2 million per occurrence and a $2 million aggregate.
But still, there are insurance companies underwriting a general liability policy with a $300,000-$500,000 per occurrence limit for small startups and home based businesses.
On another note, large businesses can avail a general liability insurance with a $3 million-$5 million per occurrence limit and a $4 million-$5 million aggregate.
Nowadays, insurance companies allow you to add the language of other insurance policies to general liability insurance. This section defines each and explains their functions:
If your business is in the retail industry or food industry, carriers will allow you to add the terms of product liability insurance to general liability insurance.
Customers can sue a business and demand compensation if a product they bought or tested caused injuries or property damage. Product liability insurance covers this peril.
Product liability insurance covers the cost of legal defense, product recalls, and settlements if your business is liable for the injuries or property damage of a customer by selling a product which has:
Design defects
Manufacturing errors
Labeling errors
If your business is in the food industry, product liability insurance can help if a customer files a claim after experiencing allergies or food poisoning. Coverage also applies in case the aggrieved person sustained a food-borne illness.
You can add liquor liability insurance to general liability insurance if your business is involved with the sales, distribution, or manufacture of alcoholic beverages.
Liquor liability insurance covers defense costs or settlements when a customer files a claim after getting drunk and wants your business to take responsibility because:
It over-served alcohol
Its employee failed to evaluate the claimant’s level of intoxication
The claimant is a minor and even if this is the case, your business proceeded to serve an alcoholic drink
Insurance companies allow you to name additional insureds in your general liability insurance policy.
So what is an additional insured anyway? Additional insureds are entities, though not paying for premiums or owning the policy, can still be covered by your general liability insurance in case a claim is filed against them.
The naming of additional insureds is one of the most essential characteristics of a comprehensive general liability policy. It allows you to provide protection to landlords, clients, and other entities who you do business with.
All businesses need general liability insurance. However, some types need the policy at a higher degree than others. The following will find general liability insurance coverage highly useful:
General liability insurance is often confused with professional liability insurance. So it’s important you know how the two differ.
To reiterate, general liability insurance covers costs if your business injured third parties or damaged their property. It also helps when your business damages a rented space, or harms someone’s reputation.
Professional liability insurance, on the other hand, covers claims filed because there’s an issue with regards to how you accomplished a task on behalf of a client, which resulted in economic or financial losses.
General liability insurance for construction companies, also called contractor liability insurance, is underwritten for the liability exposures common in construction projects such as:
Equipment going haywire which results in injuries and property damage to the people near the vicinity of the construction project
An employee hurts someone while operating equipment due to negligence
Explosions and other major accidents happen on the construction site that inflicts injuries or property damage to others
In connection, these are the common claims covered by the general liability insurance for contractors:
Accident claims-Payment for medical and funeral fees for third-party injuries and fatality during construction. Take note that this is not applicable to employees; that will be worker's compensation policy
Copyright infringement-Your construction design or advertisements are the same as competitors. This can be room for a lawsuit. The policy can pay for the fees that may arise if sued
Property damage claims-if damage to your customer's property happens during construction, the policy will pay for the repair or replacement
Product claims-If the equipment used or established by the company causes damage, the policy can be a source of indemnification for the losses of affected parties
General liability insurance for contractors is a requirement before a project is undertaken. The amount of coverage varies as it depends on which state a contractor is operating. Note that there are states that don’t have any general liability insurance requirements in place.
Construction is a high-risk activity. And so, the cost of general liability for contractors is expensive. Most insurance companies require a hefty down payment and additional fees charged on a monthly or annual basis for a 6-month or 1-year of coverage.
Getting general liability insurance for LLC (limited liability company) is essential for small business owners. Usually, An LLC structure provides some personal protection for you, and claims made against your business still affect your income source.
Not having the total protection you need can be devastating for the business. This is where general liability insurance is needed, as it will help you manage the claims made by third parties and operate your business well. Without putting a GL policy in place, you will be the one to negotiate claims, hire attorneys, and deal with the costs.
Whenever deciding, you may always think about the money you need to spend. Most of the time, you will get the cheapest general liability insurance small business available.
But again, think about the several factors that might affect your business. All of the factors need assessment that you will decide and with the aid of your insurance agent or a broker. Through their expert advice, they can match what type of policies best fits your small business.
Small business owners are at equal risks, like other businesses. It is not true that investing in insurance must only be a priority when a company is large. Any existing business must take some time to develop a risk management plan that can protect them any time a threat to their financial stability comes their way. Buying a small business general liability insurance is actually an investment and not considered a luxury.
General liability plans are not created equal, and knowing what works for your business will give you the right coverage needed and save you from spending more than you should be. So, what exactly is a small business liability insurance?
In its simplest form, this type of insurance offers coverage for the cost that might incur if a customer is hurt or injured at your establishment. But small business liability insurance covers more than that. It can cover costs for settlements out of court, personal distress and suffering, penal damages, and compensation in excess of actual damage. For rented spaces, this business liability insurance can offer protection for damages due to fire or explosion.
While these are the risks covered by small liability insurance, there are circumstances not covered by costs when employees or you encounter an accident in the establishment. Cease of business operation due to natural disasters or employee injuries, employee contention, cyber-attacks, and errors and omissions are other cases not covered by this insurance. These situations are covered by other insurance types that you may buy separately or acquire as an add-on to your business owner’s policy.
Small business general liability insurance cost is dictated by many factors and the available budget the business has. The risks that you might encounter will be one of the significant factors you need to think about. If your business is high-risk for accidents or injuries, it is a must to get more coverage, and if your business is low-risk, it is better for you if you get reasonably-priced general liability insurance for small business.
Food liability insurance is a general liability policy underwritten for food businesses. Consider getting this if you own a:
Food liability insurance will cover settlements and defense costs if a customer files a claim against your business for improper food preparation or food poisoning.
This will also cover costs if your food business over-served alcoholic beverages to a customer who then became drunk and sustained property damage or bodily injuries.
Note that food liability insurance also covers your liability for rented premises. This is very useful if you’re a food vendor selling at flea markets, festivals, stadiums, and farmers' markets.
A $1 million business liability insurance coverage is $35.79 per month or $429.48 per year. General liability insurance cost isn’t the same for all businesses. That said, it’s possible for your actual rate to be higher or lower than the average cost we stated.
Many factors affect the cost of general liability insurance. When getting a general liability insurance quote, companies will require you to provide pertinent information such as:
Number of full-time or part-time employees
Employee and subcontractors’ payroll
Location
Claims history
Business location
Business founding date
The products your business offers
How much coverage you need
Whether your business is operated at home or not
Square footage of your business
To get a better understanding of your rates, we recommend you compare general liability insurance quotes online. Speaking of which, here’s a table showing the rates of the best companies:
Cost per Month | Cost per Year | Best for | |
---|---|---|---|
NEXT | $11 | $132 | Best overall; Fastest general liability insurance |
CoverWallet | $29 | $348 | General liability insurance quotes comparison online |
Hiscox | $30 | $360 | General liability insurance with worldwide coverage |
Tivly | $31 | $372 | Comparing general liability insurance quotes over the phone |
Thimble | $49 | $588 | Short-term general liability insurance |
The following are proven ways for you to enjoy cheaper business liability insurance cost and save money:
Get a high deductible
Get lower policy limits
Bundle general liability insurance with other insurance products in a business owner’s policy
Keep your business’s claims history clean
Create a risk management plan for your business
Get certifications if your business is providing specialty services
Get all the best quotes from leading providers in a click of a button!
Read this section to know the pros, cons, and rate of the best companies that underwrite a $1 million general liability insurance for small and big businesses.
Best overall
Issues an online proof of insurance you can easily show to anyone
Fastest GL online
Great customer service and reputation
Outstanding value for money
Bundle two or more policies and get a 10% discount
Might not provide coverage if your business profile is poor
NEXT’s general liability insurance is especially tailored to the needs of independent professionals and small businesses.
This company’s general liability insurance allows you to choose between $300,000, $1 million, or $2 million per occurrence limit with an aggregate of $1 million or $2 million.
Your general liability policy from NEXT comes with an online certificate of insurance, which can be sent to anyone easily via the company’s mobile app.
NEXT allows you to save money on general liability insurance premiums by giving a 10% discount if you bundle the policy with workers compensation or commercial property insurance.
Best for: Best overall; Fastest general liability insurance
Average cost: $11 per month
Our rating: 10/10
Compare general liability insurance quotes online
Unlimited number of additional insureds you can name on your general liability policy’s terms
Cancel your general liability insurance anytime
Online policy management with the MyCoverWallet app
Not an insurance company but an insurance broker
CoverWallet offers commercial general liability insurance for businesses in different industries. Your general liability insurance from this company will have a $1 million-$2 million per occurrence limit with a $2 million aggregate.
Also, you can add an unlimited number of additional insureds. CoverWallet even allows you to view the status of and manage your general liability insurance through its online app. Last but not least, the company lets you add terrorism coverage and hired/non-owned auto coverage to the terms of its general liability insurance.
Best for: General liability insurance quotes comparison online
Average cost: $29 per month
Our rating: 10/10
Responsive customer service
Compare quotes over the phone
You can bundle general liability insurance with other desired policies
Takes you to its partners if it can’t provide coverage
No mobile app for insurance management
Tivly (formerly CommercialInsurance.NET) provides general liability insurance for a wide range of small and big businesses. Your general liability policy from this company has a $1 million-$2 million per occurrence limit with a $2 million aggregate.
This company gives you the option of bundling general liability insurance with other insurance policies that are useful for your business. Also, if ever your business doesn’t match its underwriting appetite, Tivly will hook you up with its partners.
Call Tivly now to compare quotes over the phone.
Best for: Comparing general liability insurance quotes over the phone
Average cost: $31 per month
Our rating: 10/10
Fast online quotes
Short-term general liability insurance
Cancel a policy and get a reasonable refund
Instant coverage
You can’t call customer service
Thimble underwrites a general liability insurance you can avail in many ways.
This company sells short-term general liability insurance that lasts for hours, days, or weeks. There’s also a monthly general liability policy you can pause anytime.
And then, in case you want long-term coverage, Thimble sells an annual general liability insurance that can be added with equipment breakdown coverage.
Thimble’s general liability insurance has a $1 million-$2 million per occurrence limit with a $2 million aggregate. It allows you to name additional insureds for free.
Best for: Short-term general liability insurance
Average cost: $49 per month
Our rating: 9/10
File and track a claim quickly online
Apply online or call to get general liability insurance
In-house team of insurance adjusters
Worldwide coverage
Customers complain a lot about how Hiscox handles general liability insurance claims
Hiscox underwrites general liability insurance for businesses that operate locally and internationally. This company’s general liability insurance provides worldwide coverage and has a per occurrence limit of $300,000-$2 million depending on the policyholder’s business profile.
Best for: General liability insurance with worldwide coverage
Average cost: $30 per month
Our rating: 9/10
This company does not care about the people they insure or the people that work for the company. They do stupid meets all day long about quality on calls while injured workers sit in pain waiting for answers but can never get to anyone to help them. This company hires uneducated people to run the company so that nothing important get done. I have heard so many stories about injury workers having bad service. They can’t never get their claims adjuster on the phone and the doctors that this company tells people to go to do not care about their patients causing their injuries to become worse. This company neglect on taking care of people’s injured employees have caused people to end up with disabilities for the rest of their life. if you get insurance under this company you will end up having to hire a lawyer to fight them in court. Do not get a policy with this company. Your employees will pay the price and so will the owners of the company. Honestly they need to get shut down. Avoid at all cost do not get this insurance and do not work for this company.
Terrible customer service. I got this insurance for my Amazon store when I ran one, took a break and cancelled all my subscriptions. I called these guys and they recommended sending an email. They never responded and have been charging me since then. Definitely going to dispute via the bank. Hate when businesses take advantage of other small businesses for their own gain.
I purchased a year long policy for my small business I paid for the year up front. First they sent me the incorrect paperwork and acted as if I had something to do with the mistake. About three weeks later I received a bill for the policy. I then sent countless email as the payment did clear my account. About a week later I'm told they have no record of my payment. Now I have to send any documents proving I said then. It went on for weeks. More requests of proof from this person then another. Every conversation had an under lying tone of me being dishonest. Finally I just gave up with them and filed a despite with my bank which took all of three days.. So now I'm continuing to receive emails that my policy is past due and will be cancelled. Funny, I was told I didn't have a policy because they couldn't locate it.
Purchased the General Liability policy I needed to fulfill a contract for my hiring party. Simply Business made it very easy to complete an application and review multiple quote options. Ended up purchasing a policy for 1/2 of what I originally was told by my agent.
I insured my small business with them from early 2016 to January 2022. I had a workman's compensation policy with them the entire time for my staff of approximately 10 people which fluctuated up and down minimally over the years. We ran a very safe operation and never had so much as one claim. I sold my business in early 2022 and cancelled my policy which triggered a final audit of $2871.00 which was owed back to me. Of course I dissolved my LLC immediately after selling the business and thus closed my bank checking account at the advise of my accountant. Though my name was on the business policy, Employers Preferred Insurance Company refused to issue a check to me directly as the policy holder due to...you guessed it, policy. Long story short, if you sell your business keep a small amount deposited in the checking account because it's almost a guarantee that companies such as Employers will use their policy to weasel their way out of money owed after the dissolution of a business. I should have known that I would be treated a just another number shortly after I signed with them as the sales agent just disappeared after I was set up for an online account to manage my policy. My next business venture will entail me working with an actual insurance agent who has an office in an actual brick and mortar building!