What is the purpose of a liability policy?

Public liability insurance covers the cost of claims made by members of the public for incidents that occur in connection with your business activities.

Public liability insurance covers the cost of compensation for:

• personal injuries
• loss of or damage to property
• death  

Policies vary from insurer to insurer, but most public liability policies cover you for:

• incidents that occur on your business premises
• incidents that take place off-site, at events or activities organised by your company

Do I need it?

You should consider public liability insurance if:

• you own business premises that members of the public, customers or clients visit
• your business organises off-site events or activities that are attended by members of the public
  • for more information see the ABI's guide to planning an event
• you run a business from your home and people visit your home for professional purposes

If you own a horse riding establishment you are legally obliged to have public liability insurance. For more information contact your local authority – contact details for your local authority can be found through the GOV.UK website.

Public liability insurance covers anyone, apart from employees, with whom you interact as part of your business operations such as:

• people visiting your business
• customers
• clients
• people taking part in events or activities you have organised
• people watching events or activities you have organised

Public liability insurance does not cover employees, temporary staff, students or people on work placements – for this you need employers’ liability insurance.

Buying public liability insurance

You can buy public liability insurance directly from an insurer or from a specialist broker through the British Insurance Brokers’ Association (BIBA).

The cost of your premium is usually based on:

• the nature of your business 
• the number of people you employ 
• your insurance claims history

For more information on business insurance see the ABI guide to insurance for small businesses (pdf 466kB).

Also known as business liability insurance, general liability insurance protects you and your business from “general” claims involving bodily injuries and property damage. Almost every business has a need for general liability insurance.

General liability insurance definition

General liability insurance can help cover medical expenses and attorney fees resulting from bodily injuries and property damage for which your company may be legally responsible.

What does general liability insurance cover?

General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations. It may also cover you if you are held liable for damages to your landlord’s property.

General liability insurance doesn’t cover employee injuries, auto accidents, punitive damages (in most states), workmanship, intentional acts or professional mistakes.

Related topics & resources

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

There are plenty of calamities that can put a serious dent in your bottom line. For instance, your employee might spill a can of white paint on merchandise. Or a customer might get hurt after tripping on a rug in your store. Or you could be sued for reputational harm due to something you or your employee said.

General liability insurance covers a small business from these types of problems (and more). It’s an essential coverage type for small business owners.

What Is General Liability Insurance?

General liability insurance protects a business against claims of bodily injury and property damage from customers and clients. These types of claims may result from your company’s products, services or operations. Without general liability insurance, you could end up paying out of your business’s income and, in a worst-case scenario, even go bankrupt.

General liability insurance is sometimes called “business liability insurance” or “commercial general liability insurance.”

What insurance do I need for my small business?

General liability insurance is a core coverage type for any small business insurance policy, but it’s only part of the solution for the multitude of problems that could financially impact your company. You’ll want to add more coverage types to protect your company against other types of risks, such as fire, theft, vandalism and lost income.

A good way to get started is with a business owners policy (BOP). It bundles general liability insurance along with commercial property insurance and business interruption insurance (also known as business income insurance).

You can also add other types of business insurance to meet your company’s needs. For example, if you use a vehicle for work purposes, you can add commercial auto insurance.

Business Loan Offers

Loan amounts

$2,000 to $250,000

Loan amounts

$5,000 to $250,000

Loan amounts

$5,000 to $500,000

Time in business

6 months

What Does General Liability Insurance Cover?

General liability insurance protects a business from a variety of possible claims, including bodily injury, property damage, copyright infringement, reputational harm and advertising injury.

• Bodily injury caused by a business is a common claim. If someone comes to your place of business and is injured, a general liability policy would cover their medical costs. A bodily injury claim could be something as simple as a fall by a customer at a store or office.
• Property damage is another common liability claim. Your business may be legally responsible if a person’s property is damaged while at your business. Property damage claims could also include damage to a client’s home or other property if you are visiting them on business.
• Copyright infringement claims come about if you are accused of using someone else’s work in your business ad or other business marketing without their permission.
• Reputational harm can happen, for example, if you’re being interviewed by a news outlet and you say something about another company that hurts their business.
• Advertising injury can happen if your business defames another person, business owner or company.

These types of liability claims are prevalent, so you’ll want to keep your business protected with the right insurance. For example, the average cost of a slip and fall claim is $20,000. And if you face a reputational harm lawsuit, you could be facing $50,000 in costs, according to The Hartford.

A good way to extend your business liability insurance is by purchasing a commercial umbrella insurance policy. This gives you an extra layer of protection from expensive lawsuits.

What Does General Liability Insurance Not Cover?

General liability insurance covers a lot for a business but it doesn’t cover everything.
It won’t cover business-related auto accidents, employee injuries and illnesses, damage to your business property, mistakes in professional services, claims that exceed your policy limit or illegal acts by you or your employees.

For these kinds of liability claims, you’ll need different types of business insurance, including:

• Employee injuries and illnesses. You need workers compensation insurance to provide coverage for employee injuries.
• Auto accidents. For auto accidents while doing business, a commercial auto insurance policy financially protects you if you own the car. A hired or non-owned auto insurance offers protection if you use a personal car or rented car for work.
• Professional mistakes. An errors and omissions insurance (E&O) policy provides coverage if you make mistakes in the course of your work. An E&O policy is sometimes called professional liability insurance.
• Theft and damage to your business property. General liability insurance won’t cover your business equipment or property against theft or damage. You need a commercial property insurance policy to cover these types of problems.

Insurance won’t cover intentional acts, such as a computer you throw out the window. And general liability insurance won’t help if there are deliberate, illegal acts or wrongdoings by you or your employees.

Who Needs General Liability Insurance?

Here are situations where you’d benefit from business liability insurance coverage:

• Your business is open to the public or clients or vendors.
• You advertise or create marketing materials for your business.
• You use social media personally or professionally.
• You use third-party locations for business activities.
• You need insurance coverage in order to be considered for work contracts.
• You have temporary employees.

What types of businesses benefit from general liability insurance?

The types of businesses that typically buy general liability insurance include:

• Small business owners
• Landscaping companies
• IT contractors
• Real estate agents
• Consultants
• Marketing firms
• Janitorial services
• Artisan contractors

Is general liability insurance required by law?

Business liability insurance isn’t required by law, but if you fail to buy coverage, you’re leaving your business vulnerable to a wide variety of costs that could potentially bankrupt your business.

How Much General Liability Insurance Coverage Do I Need?

Most small businesses choose standard coverage amounts of $1 million per occurrence and a $2 million aggregate policy limit for their general liability insurance coverage, according to Insureon. This type of policy will pay up to $1 million to cover a single general liability insurance claim, with a $2 million limit for all claims during the policy period. The policy period is typically one year.

How Much Does General Liability Insurance Cost?

General liability insurance costs an average of $42 a month, according to Insureon. It might be less than that—17% of Insureon’s small business customers pay less than $25 per month for their general liability policies. 

The cost of general liability insurance coverage varies based on the size of the business, your industry, your location and the amount of coverage you need.

You can manage general liability insurance costs by choosing the insurance limits that best meets your needs. A business owners policy is a convenient and cost-effective way to combine general liability insurance and business property insurance. But you also can buy general liability insurance all on its own.

How much you pay for general liability insurance depends on key factors such as:

• Your type of business. If your company is a high-risk business, you pay a higher cost for general liability insurance.
• The years of experience of your business.
• Size, location, condition of your building.
• Policy details, such as deductibles and coverage limits.
• The insurance claims history for your business.

The Risks of Not Having General Liability Insurance

Facing judgments, legal settlements and lawyer fees without the aid of general liability insurance can be very expensive and even bankrupt a business. Legal counsel can cost more than $100 an hour. Court costs may exceed $75,000 if the claim goes to court, and you may need to spend several thousand dollars even if a lawsuit is dropped, according to The Hartford.

Not having general liability insurance puts your business at financial risk. And you may lose clients because they won’t do business with you if you don’t have general liability insurance.

To prove that you have insurance coverage, you’ll need a certificate of insurance. This official document lists all the coverage types and limits on an insurance policy.

How to Get the Best General Liability Insurance

Here’s a guide to getting the best general liability insurance.

Gather your information and documents

Before you start shopping for a general liability insurance policy, you’ll want to make sure you have all of the necessary information handy. Here’s what you’ll need:

• Basic contact information
• Information on what your business does
• Number of employees
• Details about your business location, including if you own or rent the building where your business is located
• Documentation to show how long you have owned your business
• Estimated business revenue for the upcoming year

Consider a business owners policy

As a business owner, you have options. Should you go with general liability insurance or business owners policy?

A general liability insurance policy is foundational coverage for your small business, but it won’t cover problems like theft, vandalism, fire, severe weather and lost income. If you want coverage for these types of issues, you’re going to need to buy additional coverage.

A good way to do this is by purchasing BOP, which bundles general liability insurance with commercial property insurance and business interruption insurance. It’s typically cheaper to buy a BOP than to buy all three policies as standalone policies.

Compare general liability insurance quotes

Whether you buy general liability insurance as a standalone policy or as part of a BOP, you’ll want to compare business insurance quotes from several insurance companies. That’s because insurers don’t price their policies the same.

You can get free business insurance quotes online or by speaking with an independent insurance agent.

Business Insurance Made Simple

Compare Free Quotes From Top Insurers at SimplyBusiness. Get a Policy in Under 10 Minutes.