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General Liability Insurance: Definition, Coverage, Cost, & Providers

If you run a small business and need a business insurance policy to protect your business, the first policy you should obtain is the general liability insurance, also called commercial liability insurance. In general, it protects your business against claims for bodily injury, damage to property, or personal injury. Let’s learn more about the specific coverages of general liability insurance.

The Definition of General Liability Insurance 

Also called small business liability insurance or commercial liability insurance, general liability insurance protects your business against claims for bodily injury, damage to property, or personal injury. General liability insurance might pay medical costs if a customer is hurt at your place of business, or it could pay for repair or replacement if a worker from your company damages a client’s property. 

General liability insurance also protects against libel or slander from past or current employees. It’s important for companies of all sizes, but especially for small businesses, which may not be able to afford to pay for damaged property or medical bills. 

What does General Liability Insurance Cover? 

Bodily Injury: 

These are situations where a client could get hurt, either on your business’s property or their own. Businesses where injuries are common–gyms, sports leagues, even yoga studios–should take steps to protect themselves. Construction, engineering, and blue-collar jobs like plumbing and welding all would also be good candidates for general liability insurance. But even if your business isn’t a high-risk for injury, accidents still happen. Better to be prepared than have an expensive lawsuit on your hands. 

Damage to Third Person Property: 

This covers property damage at a client’s home or business. If one of your employees breaks a client’s priceless vase, or your construction worker accidentally puts his wrecking ball into the nearby Starbucks, you’re going to want general liability insurance. You’ll be covered for any damages to a third person’s property, and won’t have to pay the expenses out-of-pocket. 

Advertising Injuries: 

If your business advertises, you’ll want to consider this. You could be held liable for infringing on a trademarked copyright or slogan if your business’s ad is too similar. You could also be on the hook if you inadvertently use an idea in your ads that belongs to a third party. General liability insurance protects against these advertising injuries, which could happen even to well-meaning businesses. 

Medical Expenses: 

These are the medical costs of the bodily injuries covered above. There are thousands of ways for clients to get injured, and you don’t want to be on the hook for expensive medical bills. Be sure to note that general liability insurance does not cover you or your employees in case of injury. This is covered by separate Workman’s Compensation insurance. 

Legal Defense Costs: 

Even groundless lawsuits can be stressful, time-consuming, and expensive to fight. Legal fees can easily run into the tens of thousands of dollars, which could be a death sentence for small businesses. General liability insurance covers legal fees and defense costs for your business, whether or not the claim against you is legitimate.  

>>MORE: Best 5 Providers of General Liability Insurance for Small Businesses

What does General Liability NOT cover? 

While general liability insurance is quite useful, there are some things it does not cover. Any injury to you or your employees is not covered, and will have to be covered under Workman’s Comp insurance. Any property damages to your business caused by carelessness or employee error are not covered by general liability, but by commercial property insurance. Any vehicles used by your business are not covered either under general liability (you’ll need commercial auto insurance for that).

Who Needs General Liability Insurance? 

All businesses should consider general liability insurance, especially small business owners. Any business where you or your staff interact with clients or enter client homes is going to want general liability coverage. If your company uses third-party locations for jobs, you’ll want protection against injury and property damage at the job site. Put it this way: does your company advertise? If so, you probably want general liability coverage.  

How Much Does General Liability Insurance Cost? 

If you are wondering, how much does general liability insurance cost, don’t fret over it any longer. This insurance is actually very affordable. The median costs for general liability are between $300 to $500 a year for small businesses

The costs of general liability are also affected by different factors like:

  • Company Size
  • Industry
  • Location
  • Coverage Amount
  • Prior Claims

How to Get General Liability Insurance Quotes?

You can get general liability insurance quotes online or by calling into one of multiple insurance providers who offer it. Most, if not all, business insurance companies offer general liability insurance. It is one of the most popular business insurance policies for any business.

We recommend starting with a digital insurance broker who works with customers to find and compare quotes from different insurance companies. Digital brokers partner with several business insurance companies and they are able to provide you with several quotes from these companies so that you can compare quotes in one place, conveniently. Here are a few

  • Coverwallet
  • Simply Business
  • Commercialinsurance.net
  • ez.insure
  • Citizens General Commercial Insurance Broker

How to Get Cheap General Liability Insurance? 

Your business wouldn’t be in business if it had to pay a lot in expenses every month. It makes sense to look for the best deals on insurance so you can maximise savings as much as possible. Here are a few ideas for how to get cheap general liability insurance when you need it:

  • Shop around for quotes from multiple insurance providers. 
  • Manage your risks by using new equipment and providing a safety plan for employees.
  • Consider bundling policies for a discount, like pairing commercial auto and general liability.
  • Opt for a higher deductible to lower your coverage costs.
  • Consider paying for insurance in full rather than over monthly payments.

As we mentioned above, any types of business of any size need general liability insurance. We provide a bit more details below about general liability insurance for some of more popular businesses:

General Liability Insurance for Contractors 

Whether you are a general contractor or an independent contractor, it’s also a good idea to protect your business with general liability insurance. 

General contractors usually work in the home remodeling and construction industries which are rife with hazards. Independent contractors operate in a wider range of industries, including real estate construction and remodeling. You’ll also find independent contractors in:

  • Health & Fitness
  • Beauty Care
  • Business
  • Accounting
  • Technology

There are many insurance providers that offer general liability insurance for contractors, including The Hartford, Hiscox, and Coterie. 

If you are looking for some of the cheapest liability insurance for contractors it’s important to keep some of the above recommendations in mind for finding low-cost options and getting discounts. But also, consider meeting with an independent insurance agent or broker who can help you get and compare several quotes and find the most affordable policy for your business.

General Liability Insurance for LLCs

Becoming a limited liability corporation (LLCs) can help protect your personal assets if your small business is sued. However, it won’t protect your company from the risk of lawsuits and potential settlements. If you want your business to make it through potential challenges without folding, make sure your LLC is covered by general liability insurance and other insurance options, like:

  • Commercial Auto
  • Professional Liability
  • Product Liability

General Liability Insurance for Non-Profit Organizations 

Non-profit organizations are legally designated companies and organizations that focus primarily on social causes and in the support of the local community. Even though these groups don’t take profits for themselves, many operate like a business with an onsite location, products that are sold, and clients and volunteers they work with in their efforts.

It makes sense to obtain general liability insurance for non-profit organizations for these reasons. If someone slips and falls in your office, you could still be vulnerable to a potential lawsuit. General liability for most non-profits isn’t an expensive prospect. Per Insureon, it’s about $400 to $600 per year.

General Liability Insurance for Sole Proprietors

As a sole proprietor, you’re likely to fill many roles in the operation of your business. From managing the accounts to completing projects for clients, it’s all up to you. It’s a lot to do, but there’s one way you can delegate some responsibility—through general liability insurance for sole proprietors.

Sole proprietors can find insurance that covers their needs for an affordable cost every month because they are usually only covering a one person operation. You’ll definitely want to get enough coverage to protect yourself from the high costs of a lawsuit and defense attorneys. However, that amount will vary depending on the state you live in and the industry your business operates in. Be sure to research it carefully or ask an insurance agent for their recommendations.

Trucking General Liability Insurance 

If you are an independent operator or a commercial trucking business, you are already required to carry a lot of insurance, including commercial trucking insurance. It can be hard to consider adding more on top of that when the cost of trucking insurance is so high. Though, it is worthwhile to protect your business operations with as much insurance as possible, especially if you have a business location where accidents can happen. 

Thankfully, the costs of trucking general liability insurance aren’t that expensive compared to your other required insurance coverage. According to TRUiC, trucking companies spend between $450 – $1,000 per year on general liability coverage. You can add this coverage to your existing policies without breaking the bank account and enjoy up to $1 million in protection for your company.

Best General Liability Insurance Companies 

Of course, you’ll want to find a good insurance provider to help protect your business operations. BravoPolicy has put together a list of some of the best general liability insurance companies. Consider comparing quotes from these providers to see if one is a good fit for you:

  • Hiscox: If you are a sole proprietor or independent contractor you’ll find that Hiscox offers a lot of support. They even have a special division for dealing with small businesses employing less than 10 people.
  • The Hartford: As a small business it can be hard to navigate the challenges of insurance and the claims process. Hartford is known for providing great customer service that will help you through these concerns.
  • Next Insurance: When you don’t want to deal with phone calls or going into an agent’s office, Next Insurance is a great choice. They offer a completely digital experience from buying a policy to filing a claim.
  • Travelers: Those looking for a discount can find it with Travelers Insurance, which offers lots of options for savings and through bundling your policies. 

Similar to other personal insurance lines, business insurance providers need to have license to operate in a particular state. Different insurers might be available in different states. Below are the details of coverage, costs, and best providers of general liability insurance in some selected states.

General Liability Insurance in California 

Even though California doesn’t require general liability insurance for small businesses, it’s still a good idea to consider getting this type of insurance. Having general liability in California protects your company from being sued and losing potentially thousands or even millions of dollars. By the way, there’s no cap on settlements for liability suits in California, so you can lose everything!

General Liability Insurance in Texas 

If you operate a small business in Texas, you may also be delighted to learn that general liability insurance isn’t required in this state. However, it’s still possible to get sued or hit with fees for accidents and injuries. Also, claimants generally have up to two years to file civil suits, and up to four years to file fraud or debt collection suits. So, you can be potentially hit with a surprise lawsuit at any time. Consider protecting yourself with one of the best general liability insurance companies in Texas to avoid the worst.

General Liability Insurance in Florida

Florida is a state that doesn’t require general liability insurance in an attempt to be more business-friendly. However, you will be expected to carry workman’s compensation and commercial auto insurance, if you use a vehicle in business operations. 

Even though general liability in Florida isn’t required, it’s still a good idea. However, there are a high number of lawsuits filed in Florida and the state’s judicial system tends to award high settlement amounts. Here are the top providers of general liability insurance in Florida for your consideration

General Liability Insurance in New Jersey

If you are a small business owner in New Jersey, you aren’t required to carry general liability insurance. Unfortunately, it’s hard to operate in this state because of the high cost of living and level of competition amongst small business owners. Also, New Jersey is one of those states that tends to give high award settlements in lawsuits. 

Protect your business from going out of business if you are hit with a lawsuit with one of the top providers of general liability coverage in New Jersey. You may also want to get:

  • Professional Liability
  • Commercial Auto
  • Worker’s Comp.
  • Business Owner’s Policy
  • Cyber Liability

General Liability Insurance in New York 

Finding affordable general liability insurance when you run a small business in New York can be a challenge. It’s even more difficult for those who work as contractors, since many insurance providers won’t cover them. 

Why? 

Many construction sites in this state, especially in New York City, involve work on skyscrapers. New York also has a habit of approving high awards on accidents. This is because certain labor laws were enacted decades ago to provide additional protections to laborers who were injured in falls or gravity related accidents. 

So, many insurance providers stopped covering general contractors. You can still find some providers for your business through brokers who will do the hard work of tracking down insurance for you. Check out CoverWallet or Simply Business. If you are a small business looking for general liability insurance in New York, here is the list of the top providers of general liability in New York.

The Difference Between General Liability Insurance and Professional Liability Insurance 

If you are still a little confused about the purpose of general liability insurance compared to say, professional liability insurance, we understand. There are many different kinds of insurance coverage available for small businesses and it’s easy to mix them up. Here is a quick comparison for you:

General Liability Insurance: Protects against accidents, insult, and injury that occurs during business operations, on business property, or via a product or service provided. Meant to cover events involving your customers and third-parties, not yourself or your employees.

Professional Liability Insurance: Also known as errors and omissions insurance, this type of coverage protects you when a client feels that some advice or service caused financial loss. This covers failure to deliver service, bad advice, and clerical errors.

The Difference Between General Liability Insurance and Workers’ Compensation Insurance

It may also be hard to discern the difference between general liability insurance and workers’ compensation. While general liability does cover costs associated with accidents and injuries, it is tightly focused on providing coverage for injury to people not employed by you. General liability covers incidents involving customers, people who come onto your business property, or damage done to the customer’s property or other people’s property by your company.

Worker’s compensation insurance covers the costs associated with accidents and injuries to your employees. So, you’ll be able to pay for:

  • Lost wages as a result of injury
  • Medical expenses associated with injury
  • Death benefits after a work accident

Final Thoughts

Now that you know the ins and outs of general liability insurance, you’re ready to make an educated decision about coverage. It’s important to remember what general liability insurance covers (bodily injury, medical expenses, damage to client property) and what it doesn’t (workplace injuries to your employees or property). No one knows your business better than you–the risks, the challenges, the potential for growth. With the information above, you’ll be able to compare rates and quotes from different companies and choose the best coverage for your business. And don’t forget to consider bundling general liability insurance with other types of coverage, like commercial auto insurance or workers compensation insurance. It can save you time and money in the long run!

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