10 Frequently Asked Questions About General Liability Insurance

Key Takeaways

• General liability (GL) insurance protects your business from third-party risks, including bodily injury, property damage, and personal or advertising injury.
• It’s broad coverage, but not all-inclusive. It does not cover things like employee injuries, professional mistakes, your own business property, or vehicle accidents.
• Even when not legally required, it’s often essential for doing business: many landlords, clients, and contracts require proof of GL coverage.

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If you’re a small business owner, figuring out whether you need general liability insurance and what it actually covers can feel like a lot. There’s plenty of insurance jargon out there, and it’s not always easy to know what applies to your business and what doesn’t.

This guide breaks down the 10 most common questions about general liability insurance without the jargon, so you can quickly understand what a policy covers, what it doesn’t cover, how much it may cost, and whether it makes sense for your business.

1. What Is General Liability Insurance?

General liability insurance coverage protects your business if a third party claims your business caused bodily injury, property damage, personal injury, or advertising injury. In other words, it’s designed to help when someone from outside your company — like a customer, client, vendor, or visitor — says your business caused them harm or someone from your business damaged their property.

This coverage can help pay for legal defense costs, settlements, and court judgments, up to your policy limits. That matters because even if a claim turns out to be unfounded, defending yourself can still be expensive. In addition, your general liability insurance can help pay for things like third-party medical bills and the cost of repairing or replacing damaged property.

For most businesses, general liability insurance is the starting point for financial protection from the most common risks they face.

2. Is General Liability the Same as Commercial General Liability (CGL)?

Yes. General liability and commercial general liability insurance mean the same thing. The word “commercial” simply emphasizes that the policy is for business use. General liability may be shortened to GL, and commercial general liability is sometimes shortened to CGL, but the terms are interchangeable.

So if you see “CGL insurance,” “commercial general liability,” or just “general liability insurance coverage,” people are usually talking about the same core business protection.

3. What Does General Liability Insurance Cover?

At its core, general liability insurance coverage  general liability insurance coverage protects your business against several common third-party claims by paying for legal defense and damages, as well as things like medical bills and repairs. The main third-party claims covered by general liability insurance include bodily injury, property damage, personal injury, and advertising injury.

Bodily injury coverage

Ever see a customer trip in your office and think, “oh man, I’m glad they didn’t hurt themselves”? Well, bodily injury coverage in a GL policy would help protect your business if that customer did fall and get hurt. If that person demands payment for medical bills or sues your business, your policy may help cover the related costs and provide you with legal defense.

Property damage coverage

Property damage coverage applies if you or your employee accidentally damages someone else’s property. Maybe you’re working at a client’s office and knock over expensive equipment, or signage outside your business falls and damages a parked car. In situations like these, general liability insurance can help cover repair or replacement costs, along with legal expenses if the damaged party takes action against you.

Personal & advertising injury coverage

This part of general liability insurance coverage is sometimes overlooked, but it can be important, especially if you are advertising your business. Personal injury coverage can help protect you against claims that you damaged someone’s reputation, including through libel and slander. Advertising injury protects your business from claims of copyright infringement in advertising or improper use of another company’s branding or slogan.

For example, if a competitor claims an article you published harmed their reputation or an ad you released copied protected material, your general liability policy may help with defense costs and settlements.

4. What Is NOT Covered by General Liability Insurance?

General liability insurance is broad, but it doesn’t cover every type of business risk. Knowing what’s excluded can help you avoid gaps in protection.

Employee injuries (workers’ compensation)

If one of your employees gets hurt on the job, general liability insurance won’t cover it. Employee injuries are handled through workers’ compensation insurance, which is required in most states for businesses with employees.

Professional errors & omissions

General liability insurance also does not cover professional mistakes and oversights that cause a client’s financial loss. Common claims involve missed deadlines, bad advice, or failure to deliver services as promised. Those risks are covered by errors and omissions (E&O) insurance. E&O coverage is essential if you provide specialized services or advice to your customers.

Your own business property

General liability covers damage your business causes to someone else’s property, not damage to your own office, tools, furniture, equipment, or inventory.

Protecting your own property usually comes from business personal property (BPP) insurance (covers tools and inventory) or commercial property insurance (covers the building that your business owns, as well as its contents).

Some insurers, including Berxi, allow you to add BPP coverage to a general liability policy to help protect your business assets from covered damage or theft. You can add this to your policy when checking out online.

Vehicle accidents

If a business-owned vehicle causes an accident, general liability insurance doesn’t apply. For that, you’d need commercial auto insurance.

Data fraud

If your system is hacked and all your customer data gets leaked, you could be sued for a cybersecurity breach. For this reason, a lot of people buy cybersecurity insurance, which Berxi can help customers secure if they call 833.24.BERXI.

5. Is General Liability Insurance Required by Law?

In most states, general liability insurance is not required by law. But in real life, it’s often required in other ways, and many businesses and professionals benefit from having GL coverage. Landlords may require proof of coverage before leasing you commercial space, and clients or vendors may require it before signing a contract or allowing you to work on-site.

This is especially true for businesses that work face-to-face with customers, operate from a physical location, or regularly perform work at client properties. Even if GL insurance isn’t legally mandated, it is often a practical necessity for doing business. Plus, consider this: as of March 2026, the average hourly rate for a U.S. lawyer is $349. That one hour of work is about the same price as a year of GL insurance in which the legal defense is free.

6. Do LLCs Need General Liability Insurance?

Yes, LLCs can benefit from general liability insurance just like any other business. Forming an LLC can help separate your personal assets from your business liabilities, but it doesn’t stop your business itself from being sued. If your LLC faces a liability claim, the legal and financial costs can be significant.

That’s why many LLC owners choose to carry general liability insurance. This is especially true when they interact with clients, run a brick-and-mortar business, or sign contracts that require proof of insurance. The right coverage depends on details such as your industry, size, and day-to-day operations, but forming an LLC alone isn’t a substitute for insurance.

7. How Much Does General Liability Insurance Cost?

The cost of general liability insurance depends on several factors, including your industry, revenue, number of employees, location, coverage limits, and claims history.

The cost of your GL insurance depends on a number of factors, but for many small businesses, general liability insurance is often more affordable than expected — especially compared to the cost of a lawsuit!

For example, Berxi general liability coverage starts at just $100 per year for solo professionals, like personal trainers, and around $350 per year for small businesses.

Factors that affect general liability insurance costs

Several variables influence how much you’ll pay for general liability insurance.

• Industry and risk level: Higher-risk industries, like construction and manufacturing, typically pay more than lower-risk professions like consulting.
• Business size and revenue: Businesses with higher revenues generally face more exposure, which can increase premiums.
• Number of employees: More employees usually mean more opportunities for accidents or claims.
• Location: Insurance costs vary by state, city, and even neighborhood due to legal environments and claim frequency.
• Coverage limits: Higher coverage limits provide more protection but also increase premiums.
• Claims history: If your business has filed claims in the past, insurers may charge more to offset the increased risk.

The best way to find out how much your general liability insurance coverage will cost is to get a free online quote.

8. How Can I Lower My General Liability Insurance Costs?

There are a few practical ways to keep costs under control:

• Maintain a strong safety record. If you have a clean slate, with no general liability claims, you’ll usually pay a low rate for coverage in your state.
• Choose coverage limits thoughtfully. More coverage means more protection, but also a higher premium.
• Reduce avoidable risks. Clear walkways, proper signage, employee training, and safe work practices can all help reduce your risk and your premiums.
• Compare your options and buy direct. Buying directly from an insurance company, rather than through a broker or agent, may simplify the process and help some business owners find the right fit faster. For example, business owners who buy directly from Berxi typically save an average of 15%.

9. How Much General Liability Coverage Do I Need?

How much general liability insurance you need depends on your risk level and other factors. A common general liability policy structure is $1 million per occurrence/$2 million aggregate. “Per occurrence” is the maximum your policy may pay for a single covered claim, while “aggregate” is the total amount it may pay during the policy period.

Some businesses need higher limits, especially if client contracts require them or if the business has greater exposure to risk.  The right amount of coverage depends on the kind of work you do, how often you interact with the public, whether you work on client property, and what your contracts require. If you’re unsure, it may help to talk with an insurance professional.

10. Can You Explain General Liability vs. Other Business Insurance Policies?

General liability vs. professional liability (E&O)

General liability insurance covers third-party bodily injury, property damage, and personal/advertising injury. Professional liability insurance covers claims that your professional services caused financial harm because of negligence, mistakes, or failure to perform. Many service-based businesses need both. Check out our full guide to the differences between general liability and professional liability insurance.

General liability vs. commercial property insurance

General liability covers damage your business causes to someone else’s property. Commercial property insurance helps cover damage to your own building or business property.

General liability vs. workers’ compensation

General liability protects against third-party injuries, meaning non-employees. Workers’ compensation covers injuries or illnesses suffered by your own employees because of work.

Get Affordable General Liability Insurance Coverage With Berxi

General liability insurance helps protect the business you’ve worked hard to build. It can help you meet contract requirements, manage the cost of unexpected claims, and keep legal issues from distracting you from running your business.

Berxi is part of Berkshire Hathaway Specialty Insurance Company, which has a financial strength rating of A++ from AM Best. That’s the highest possible rating. In addition, Berxi’s world-class claims team responds within one business day, and its in-house product specialists provide hands-on support when you need it.

If you’re looking for affordable general liability insurance coverage, Berxi offers options designed for small businesses and solo professionals. Get an instant quote today.

 

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The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer