The Purpose of General Liability Insurance


While about 80% of small businesses survive their first year, this number drops to 50% after about five years. One of the most common reasons for failure is financial. All it takes is one lawsuit, and a business can go from successful to failure in the blink of an eye.

If you own a business, you need to know about general liability insurance to protect your venture.

What Is General Liability Insurance?

General liability coverage protects your business and its assets. When customers or clients experience bodily injury or property damage, your general liability coverage protects the business from paying out of pocket to remedy the situation. This type of coverage prevents a business from going bankrupt from a single claim.

What Does General Liability Insurance Cover?

This type of insurance coverage doesn’t protect your business from anything and everything. While each policy is different, there are standard coverages that you can purchase to have included in your policy.

Bodily Injury

This type is one of the more common claims that this type of insurance protects against. It could be someone getting injured on the business property or getting injured by the product the business sells. This insurance will cover the injured person’s medical costs.

Property Damage

This is another common claim for this insurance. If your business is liable for damage to someone else’s property, you’ll have to pay for the repairs. This could be for repairs to a client’s home or another property.

Copyright Infringement

Copyrights protect other people’s ownership of creative work. If you are accused of infringing on someone’s copyright, this type of insurance can protect you. For example, it could pay for a settlement or legal representation during a trial.

Reputational Harm


If your advertising or publicity accidentally defames another business, this coverage can protect you from claims of damage.

What Business Insurance Doesn’t Cover

A commercial general liability insurance plan will not protect your business from everything. You can’t use it to replace workers’ compensation insurance that protects employees from injury and illness.

It won’t replace auto insurance in the event of a car accident involving a company vehicle. You can’t file a claim against the policy if your business experiences theft or damage. Commercial property insurance covers this.

How Much General Liability Insurance Coverage Do I Need?

You need enough coverage to protect your business. This amount can be different for everyone because businesses vary greatly in overall value, assets, and income. It’s helpful to look at industry standards, such as wholesalers insurance.

For many business owners, the standard insurance for small businesses is enough. This coverage is typically $1 million per policy occurrence and a $2 million aggregate policy limit.

Is General Liability Insurance Required by Law?

No law requires business owners to have liability insurance. However, not purchasing business insurance does leave your business vulnerable.

Purchase General Liability Insurance

If you own a business, then you need general liability insurance. It’s one of many insurance policies that will protect your business should the unexpected happen. All it takes is one lawsuit by an injured customer to potentially bankrupt your entire venture.

Check out our other insurance articles for more helpful advice on how you can protect yourself and your assets.