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Your general liability policy provides financial protection if you are held responsible for some of the most common accidents that can occur at a business, such as a customer injury or damages to someone’s property. It also provides coverage if you are forced to defend an accusation of libel or slander.
General liability insurance covers the risks that affect almost every business, no matter what your industry. It is the most common insurance for small businesses and self-employed professionals, and it’s typically the first policy purchased by new businesses.
General liability insurance is part of a broader category of business insurance called liability insurance. Liability insurance covers damage to third parties only. If you’re a business owner or self-employed, that could be your customers, vendors, or other people you interact with who are not your employees.
Liability insurance doesn’t cover anything that happens to you, your employees, or your tools and equipment.
In addition to general liability, there are several other types of liability insurance, including:
It’s easy to get confused with general liability insurance and other types of business insurance. That’s because some insurance companies refer to general liability insurance as commercial liability insurance, business liability insurance, or limited liability insurance.
Almost every business can benefit from having general liability insurance because it covers the most common risks that business owners face, even if you only work from a home office or workshop.
General liability insurance is not typically required by law, but some government agencies could require it for a business license. It is also common for clients and commercial landlords to ask for a certificate of insurance before they’ll sign a contract.
Next Insurance has helped thousands of unique business types in a variety of industries find the right general liability coverage, including contractors, construction professionals, professional services, fitness instructors, cleaners, and many more.
You might still be asking yourself, “Why do I need general liability insurance for business? If I’m careful, can I manage without buying liability business insurance?”
Here’s what makes small business general liability insurance so important:
Business liability insurance coverage shows that your business is reliable and trustworthy. It gives clients peace of mind knowing that you will take responsibility for your mistakes.
It could give you a competitive advantage if your potential client has a choice between your business and another business that doesn’t have insurance. Many larger clients also require coverage before they’ll sign a contract with you.
Some states and cities will only give you a business permit if you have active general liability insurance and a certificate of insurance. If your business is certified or accredited by a professional organization, you might also be required to keep your general liability insurance active.
If you plan to lease commercial space, your landlord could also insist on seeing your general liability insurance certificate. Coverage is often required because it shows you will have the financial protection needed to cover expenses related to property damage or injuries related to your business at the leased space.
When you have general liability insurance, it gives you peace of mind. You won’t have to worry about what you would do if a client trips and falls on your premises or how you would pay for a new vase if you accidentally broke one in a client’s house.
Having business liability insurance means that instead of feeling nervous about what could happen, you can concentrate on growing your business.
General liability business insurance protects you from unexpected expenses related to many types of accidents that can result in injuries, damage to property you don’t own, and accusations of libel or slander.
Accidents are not 100% unavoidable, and unfortunately, some accidents cause physical harm to people who come into contact with you, your employees, and your business.
For example, you put your toolbox down on the sidewalk for a few moments while you’re loading your van in the morning. A jogger doesn’t see it, trips, and breaks an arm. In this case, you could be sued for medical costs, and if you don’t have general liability insurance, you would need to pay out of pocket to cover any related expenses.
Lawsuits related to an injury generally fall under three categories that are covered by general liability insurance:
General liability insurance pays for medical expenses up to your policy limit.
If you are ruled responsible for an injury and the injured person is forced to miss work, your insurance would cover their loss of income.
In some cases, your policy can also cover claims related to pain and suffering, which refers to the physical or mental strain that can occur as a result of the accident.
Your general liability insurance policy covers you for damage that you cause to someone’s property. The best general liability insurance for small business includes both significant and less severe accidents.
Here are some examples:
You didn’t see a small rock during your pre-inspection of a lawn you are mowing. When your mower goes over it, the rock goes airborne and shatters a large plate-glass window. The client insists that you pay for the replacement cost.
You park your van in an office parking lot for a renovation construction project. As you’re taking out your tools, you slip and scratch the CEO’s shiny red Porsche. You have to pay for the cost of getting the entire car repainted at a certified dealer.
Your beautician assistant is giving a client a manicure and drops the bottle of nail polish. It smashes on the floor, splashing scarlet nail polish all over the client’s expensive Gucci handbag. The client wants you to pay for a replacement bag.
Personal and advertising injury claims usually occur when you’re accused of invading someone’s privacy, copyright or advertising infringement, and defamation of character.
Learn more about each category with these examples:
After renovating a client’s old bathroom, you take some pictures and use them on your website as an example of your work. Your client sees the photos and gets very upset. They sue you for breaching their privacy by using photos of their home without permission.
Your flyers about your personal trainer business refer to you as “The Rock.” The celebrity Dwayne “The Rock” Johnson sees them and his management team sues you for copyright infringement because you used his signature nickname.
Your new marketing campaign name checks your biggest competitor and claims that he offers substandard services that don’t follow local regulations. The business owner sues you for defamation of character because he claims your campaign is untrue.
Someone trips over your tools and breaks their leg.
Someone sues you for improper use of images in your advertising.
An employee bad-mouths a client on social media and the client sues you.
You drop heavy duty equipment inside your client's house and damage their hardwood floor.
Someone gets injured at your work site and asks you to pay for medical expenses instead of suing you.
You need an attorney to defend against a lawsuit even though you did nothing wrong.
Your general business liability policy covers many different situations, but it doesn’t cover everything. You might need to buy other types of liability insurance, depending on your business.
General liability insurance does not cover professional mistakes. For that, you’ll need professional liability insurance, also known as errors and omissions insurance. It can cover associated costs when a client claims you gave bad advice, made a mistake, or missed a deadline and caused financial harm.
In most states, if you have employees, you are legally required to have workers’ compensation insurance. A workers’ comp policy will cover medical bills for work-related injuries or illnesses, lost wages, and important liability protections for your business.
Most personal auto insurance policies won’t cover you for injuries or damages if you are driving for business purposes. You are required by law in most states to have commercial auto insurance if you or your employees use a business-owned vehicle.
This is a brief summary of your policy and does not supersede the policy documents. If you want full details, please call us.
It’s difficult to answer the question, “How much is general liability insurance?” Every small business is different, so general liability insurance cost is different for each one. Your general liability insurance quote depends on a few issues:
One of the easiest ways to buy business liability insurance is to get general liability insurance online. With Next Insurance, you can purchase coverage and access your proof of insurance in as little as 10 minutes.
Choose between 3 levels of general liability business insurance to pay the price that works for you.
Next Insurance keeps your small business liability insurance costs low while giving you phenomenal service. You won’t pay any extra to get these liability insurance perks:
Start a free online instant quote today to review coverage options and see how much general liability insurance will cost for your business.