What Does General Liability Insurance Cover? | The Hartford (2024)

What Is General Liability Insurance Coverage?

What Does General Liability Insurance Cover? | The Hartford (1)Many small business owners have a general liability insurance coverage to help protect their companies. You may be asking yourself, “What does general liability cover?” General liability insurance covers small businesses against claims that it caused:

  • Bodily injury
  • Property damage
  • Personal injury, like libel or slander

These types of risks can come up during your normal business operations. They can get expensive for small businesses and many don’t have the resources to cover a liability claim.

Did you know the average cost of a slip and fall claim is $20,000?1 And if you’re faced with a reputational harm lawsuit, be prepared that they can cost about $50,000.2 Without general liability insurance coverage, your business would have to pay these costs out of pocket.

What Does General Liability Insurance Cover?

What Does General Liability Insurance Cover? | The Hartford (2)A general liability policy helps cover claims that can come up during normal business operations, such as:

Bodily Injury

General liability coverage can help pay for medical expenses associated with a bodily injury that your business may have caused, like a customer slip and fall.

Property Damage

If an employee accident causes property damage, like breaking a client’s windows while working at their home, general liability insurance can help. This coverage can help cover the repair or replacement costs to fix the windows.

Personal Injury

General liability can help pay for your business’ defense costs if you’re sued for personal injury, like libel or slander.

General Liability Coverage Examples

What Does General Liability Insurance Cover? | The Hartford (3)Examples of general liability insurance coverages include:

  • Product liability coverage can help protect your business from claims that a product you made or sold caused bodily injury or property damage to someone else’s belongings.3 We offerproduct liability insurance as a part of your general liability insurance policy.
  • Product recall insurance helps you manage a product recall and protects you from the financial impacts.Product recall insurance is an endorsement you can add on to your business insurance policy.
  • Contractual liability coverage can be added on to your general liability insurance policy.Contractual liability insurance coverage helps cover claims related to contract issues.
  • Short-Term liability insurance is a type of business insurance created for short projects that take between two hours and two weeks to complete.Short-term general liability insurance gives you the same coverage as a general liability policy, just for a shorter time.

What Costs Does General Liability Insurance Cover?

What is general liability insuranceand what does it cover? General liability insurance, also known as commercial general liability insurance or business liability insurance, helps cover:

  • Costs for property damage claims against your business
  • Medical expenses if someone gets injured at your company
  • Administrative costs to handle covered claims
  • Court costs, judgments and settlements for covered claims

Your general liability insurance can help pay for claims up to your coverage limits, or your general aggregate. Yourgeneral aggregate for insurance, sometimes called the “aggregate limit of liability,” is the maximum amount of money your insurance company will pay out for claims during a policy period. So, if you have a $1 million aggregate limit on your general liability insurance policy, your insurance will pay for claims up the maximum amount of $1 million during the policy term.

What Does General Liability Insurance Not Cover?

Be aware that general liability insurance doesn’t cover every kind of claim. For some, you’ll need different types of coverage to give your business more protection.

A general liability insurance policy won’t help your business with:

  • Commercial auto accidents that you or your employees cause while driving for work. Acommercial auto insurance policy can help you cover the cost of damages. If your small business doesn’t have company-owned vehicles,hired and non-owned auto coverage could help, too. Be aware that many states require certain types and amounts of auto coverage, like bodily injury liability coverage or property damage liability coverage.
  • Employee injuries or illnesses due to their work.Workers’ compensation insurance gives your employees benefits to help them recover from a work-related injury or illness. For example, it can help cover an employee’s medical bills and ongoing care expenses.
  • Damage to your own business property. You’ll need to get acommercial property insurance policy to help protect your owned or rented building and business equipment.
  • Mistakes or errors in the professional services given to customers.Professional liability insurance can help cover your legal costs if a client sues you for a mistake in the services provided.
  • Claims that cost more than your liability limits. You’ll need acommercial umbrella insurance#TEXT# policy for expensive claims. This extends the limits of certain liability insurance policies.
  • Illegal acts or wrongdoing thatyou or your employees did purposefully can result in your business being held legally responsible.

The Dangers of Not Having General Liability Insurance

State laws generally don’t require you to carry general liability insurance. However, not having coverage could put your business at financial risk.

Judgments, settlements, legal defense fees and court costs can also be extremely expensive. If someone files a claim against your business:

  • You’ll need legal counsel, which can cost between $100 per hour to $500 per hour.4
  • The maximum amount could easily exceed $75,000 if the claim ends up in court.5
  • You may need to spend several thousands of dollars, even if the lawsuit gets dropped.

When you add the cost of administrative work, legal secretaries and any settlements or judgments, your business could face a bill totaling hundreds of thousands of dollars. The right general liability insurance policy can help your business cover these costs.

You may also find that businesses will want to make sure you have the minimum coverage they require before agreeing to work with you. They want to make sure your business can survive a liability claim and continue to do what they hired you to do. So they may ask you to provide proof of insurance, also known as acertificate of liability insurance.

Get the Right Liability Coverage for Your Business

Many insurance companies offer general liability insurance, but not all of them specialize in small businesses. We have over 200 years of experience and have helped over 1.5 million small business owners. And we can do the same for you.

Whether you have questions about different types of insurance or need help with a claim, we’ve got your back. Our specialists are here for you and can help you get the right coverage for your business.

Get a general liability insurance quote today.

Last Updated: January 10, 2024

1,2,5 Based on an analysis of five years of claims data (2010-2014) from more than 1 million Business Owner’s Policies from The Hartford.

3 Product liability insurance coverage may not be available to all classes.

4 Lawyers.com, “How, and How Much, Do Lawyers Charge?”

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Download our FREE guide and in less than a minute we'll help you understand the following:

  • Basic definitions of the essential business insurance coverages.
  • High level understand of the costs of business insurance.
  • How you can get help finding the right coverage at the right price.

As an expert in the field of insurance, particularly general liability insurance, I have a comprehensive understanding of the concepts and intricacies involved in protecting businesses from various risks. My extensive knowledge is derived from both academic study and practical experience in the insurance industry.

General liability insurance is a crucial aspect of risk management for small businesses. It provides coverage for claims that may arise during normal business operations, including bodily injury, property damage, and personal injury such as libel or slander. The importance of this coverage becomes evident when considering the potential financial implications for small businesses, as exemplified by statistics like the average cost of a slip and fall claim being $20,000 and reputational harm lawsuits costing around $50,000.

To delve into the concepts used in the provided article:

  1. Bodily Injury, Property Damage, and Personal Injury:

    • Bodily injury coverage addresses medical expenses associated with injuries caused by the business.
    • Property damage coverage handles repair or replacement costs for damages caused by the business.
    • Personal injury coverage deals with defense costs for lawsuits related to libel or slander.
  2. Additional Coverages and Endorsements:

    • Product liability coverage protects against claims that a product caused bodily injury or property damage.
    • Product recall insurance manages the financial impacts of a product recall.
    • Contractual liability coverage addresses claims related to contract issues.
    • Short-term liability insurance is designed for short-duration projects, providing coverage similar to general liability.
  3. Costs Covered by General Liability Insurance:

    • Property damage claims, medical expenses, administrative costs, court costs, judgments, and settlements are covered.
    • The coverage limits, or general aggregate, determine the maximum amount the insurance company pays during a policy period.
  4. Exclusions from General Liability Insurance:

    • Commercial auto accidents require a separate commercial auto insurance policy.
    • Employee injuries are covered by workers' compensation insurance.
    • Damage to business property is addressed by commercial property insurance.
    • Professional liability insurance handles mistakes or errors in professional services.
    • Commercial umbrella insurance extends limits for expensive claims.
  5. Dangers of Not Having General Liability Insurance:

    • Financial risks include legal defense fees, court costs, and potential judgments or settlements.
    • The absence of coverage could lead to significant expenses, making it challenging for a business to survive a liability claim.
  6. Importance of Having General Liability Insurance:

    • Businesses may be required to provide proof of insurance to secure contracts.
    • General liability insurance is a fundamental component for protecting businesses from financial risks associated with liability claims.

In conclusion, general liability insurance is a cornerstone for safeguarding businesses, and understanding its coverage, limitations, and additional options is essential for effective risk management. If you're a business owner, securing the right liability coverage is crucial to ensure your business's longevity and resilience in the face of potential liabilities.

What Does General Liability Insurance Cover? | The Hartford (2024)
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