We get it. Business insurance can be confusing and complicated. Our goal is to make it easier for you to find the coverage you need and answer all of your questions.
Continue reading to explore some of the most common questions we get about general liability insurance.
When you’re ready to explore coverage options for your business, you can get an instant quote online and purchase insurance within a few minutes. Our licensed, U.S.-based insurance advisors are ready to help if you have any additional questions.
General liability insurance is often the first type of coverage purchased by new business owners, but it’s not typically required by law. It can help cover expenses if your business is held responsible for hurting someone other than an employee or damaging someone’s property.
Even though it’s not required by law, there are several advantages to have this type of insurance — and several situations where you could be asked to have this coverage:
Clients could ask you to have general liability
Your client could require that you have general liability coverage as part of contract requirements so they know that you can pay for any accidental injuries or damage related to your work.
Having a general liability certificate of insurance also demonstrates that you’re a professional and care about their property.
You might need coverage to get a license or permit
Some permitting and licensing organizations will only grant you a business permit or professional license if you have active general liability insurance. For example, general contractors sometimes need general liability as part of the license requirements in their state.
Coverage could be required for a commercial lease
You might also need general liability insurance as part of a commercial lease agreement. If you rent property for your business, you could be asked by the property owner to carry liability insurance with specific policy limits in case an accident damages the property.
We get this question a lot. In fact, we even created a blog post that covers the many nuances of professional liability vs. general liability. Here’s a quick overview:
Professional liability insurance and general liability insurance offer similar benefits but there is one major difference — professional liability insurance covers professional mistakes and accusations of neglect. It’s often related to advice that you provide to a client or customer, not accidents that happen at the workplace.
General liability insurance provides financial protection for accidents that are more physical in nature, such as property damage and injuries involving people who are not your employees. It also covers expenses related to accusations of libel, slander and copyright infringement.
Professional liability covers your finished work but does not cover accidents or damage caused to other people or their property.
General liability aggregate is a common insurance industry term that you’ll run into when you are exploring options for this coverage. Basically, it’s the maximum amount of money an insurance company will pay out during your policy term, which is usually one year.
If your business has too many claims in one year, you might hit your aggregate limit. In that case, you would be responsible to pay out of pocket to cover remaining expenses.
Note that the aggregate limit is different from the “per occurrence” limit, which is the maximum amount your policy pays out per claim within the term of your policy.
For example, if you have a general aggregate liability limit of $300,000 and you’ve already made three claims in your policy term (usually a year) for $100,000 each, you’ve reached your aggregate limit and your insurance company won’t cover any additional claims.
It’s important to know your aggregate limit when you purchase general liability insurance. If you exceed your limit during your policy term, you will be responsible for paying for any expenses out of pocket that exceed the limit.
Learn more about aggregate limits with liability insurance.
General liability insurance covers expenses related to property damage, but only to property that does not belong to you.
For example, you’re doing work at a client’s house and accidentally damage their laptop. Your general liability insurance would help cover the cost of replacing or repairing it.
If you own a contractor or cleaning business, tools and equipment insurance can be added to your general liability insurance to help cover repair and replacement costs for your gear.
Commercial property insurance would cover damage to other types of property you own. We currently don’t offer this coverage, but we’re adding it to our insurance packages in 2021.
General liability insurance does not cover automobile liability or any expenses related to business or personal driving.
Add commercial auto insurance to your insurance package if you drive for business reasons. It can help cover expenses for:
Learn more about commercial auto coverage.
General liability insurance doesn’t cover the theft of your own possessions but it might cover the theft of your client’s stuff.
If you’re repairing a garage door for a homeowner and someone steals her bike while you’re out back, general liability could help pay for a replacement. But if any of your personal or business items are stolen, you won’t be covered without additional insurance.
You can bundle tools & equipment insurance with your Next Insurance general liability coverage if you are a contractor or own a cleaning business.
If you’re a contractor or own a cleaning business, you can add tools & equipment insurance to protect your belongings if they are damaged or stolen. General liability won’t provide tools and equipment coverage if you don’t add this upgrade to your insurance package.
You might consider adding tools and equipment coverage if you work frequently at different locations because it will provide financial protection for your equipment wherever you go. For example, if there’s a water leak at the new house you’re building and your power tools get soaked, your insurance could help pay for new tools.
Learn more about tools & equipment insurance.
General liability insurance can help pay for expenses if your business is accused of causing an injury, but injuries to you or your employee are not included.
You’ll need workers’ compensation insurance to help pay for medical expenses and lost wages if an employee is hurt on the job. Most states legally require you to purchase coverage as soon as you hire an employee. It also provides benefits for business owners if they get hurt on the job.
Learn more about workers’ compensation insurance.
Yes, general liability insurance premiums can typically be deducted from your taxes. It’s important to consult with a licensed accounting professional to make sure you qualify.
The IRS categorizes payments you make for this type of insurance to be both an “ordinary and necessary” business expense so be sure to keep a file of how much you pay every year for your policy.
General liability insurance offers protection for a variety of business-related incidents, but you might also want to consider adding other types of insurance to be fully protected.
Are you a contractor or cleaner? If so, you might want to add tools & equipment coverage to protect your gear if it is damaged or stolen.
Do you have any employees? You should definitely get workers’ compensation insurance, particularly because it’s legally required in most states.
Do you drive a vehicle for work? If so, you’ll need commercial auto insurance.
There is no cut-and-dry answer to this question. Each business is unique and has unique insurance needs.
Factors that will influence the coverage you need, include:
When you complete an instant quote online with Next, you can review options and adjust limits to your preference.
One thing that sets us apart from other insurance companies is our ability to deliver the insurance coverage you need quickly. It can take less than 10 minutes to purchase coverage and you’ll have instant access to policy documents and your certificate of insurance.
When your coverage is active, you can access your documents and COI from your online account 24/7.
Learn more about our digital certificate of insurance.
You can file a claim anytime and from anywhere, online or by calling us. You’ll be asked to tell us the details of what happened and to provide relevant photos and documentation. We strive to make claims decisions within 48 hours so you can get back to focusing on your work.
Check out our claims page for more details.
Often, claims decisions are made within 48 hours, although some claims require more time. The specific details of the claim, how bad the damage is, how many people are involved and other factors all contribute to the decision process.