General Liability Insurance Insurance — Your Questions Answered
Quick Answer
Common questions about General Liability Insurance — what it covers, costs, exclusions, and requirements explained by licensed insurance agents.
Comprehensive FAQ, cost guide, and real claims examples for general liability insurance — the foundational commercial coverage protecting businesses from third-party bodily injury, property damage, and advertising injury claims.
Quick Summary
General liability insurance (GL) protects businesses from third-party claims of bodily injury, property damage, and personal/advertising injury. It covers legal defense costs, settlements, and judgments. Most US states require GL for contractor licensing, and commercial landlords typically require it as a lease condition. Annual premiums range from $300–$15,000+ depending on industry, revenue, and claims history.
What does general liability insurance cover?
General liability insurance covers three main areas: (1) Bodily injury and property damage — medical expenses and repair costs when a third party is injured or their property is damaged on your business premises or due to your operations; (2) Personal and advertising injury — claims of libel, slander, copyright infringement, or misleading advertising; (3) Products and completed operations — claims arising from products you manufacture or sell, or work you've completed. GL also covers legal defense costs regardless of whether a claim has merit.
What is NOT covered by general liability insurance?
General liability insurance excludes: employee injuries (covered by workers' compensation), professional errors and omissions (covered by E&O/professional liability), intentional acts, damage to your own property (covered by commercial property insurance), auto accidents (covered by commercial auto), cyber breaches (covered by cyber liability), and pollution (requires separate pollution liability). Understanding exclusions is critical to ensuring you have complete coverage.
How much general liability coverage do I need?
The most common GL policy structure is $1 million per occurrence / $2 million aggregate — this meets the minimum requirements for most commercial leases, contractor licenses, and business contracts. Higher-risk industries (construction, manufacturing, events) typically need $2M–$5M+ per occurrence. Umbrella liability insurance can stack additional limits on top of your GL policy cost-effectively.
What is the difference between an occurrence and claims-made GL policy?
An occurrence policy covers incidents that happen during the policy period, regardless of when the claim is filed — even years later. A claims-made policy only covers claims filed while the policy is active. Occurrence forms provide broader protection and are standard for most general liability policies. Claims-made forms are common for professional liability. If you switch from claims-made to occurrence, ensure you purchase 'tail coverage' (extended reporting period) to cover past incidents.
Does general liability insurance cover independent contractors?
Your GL policy typically covers your business's liability but NOT the acts of independent contractors working for you. If a subcontractor causes injury or property damage on your job site, you may be held liable if you haven't required the subcontractor to carry their own insurance and name you as an additional insured. Always obtain certificates of insurance from all subcontractors before they begin work.
How is general liability insurance premium calculated?
GL premiums are calculated based on: your industry (SIC/NAICS code and inherent risk level), annual gross revenue or payroll, physical location(s), coverage limits and deductibles, prior claims history (loss runs for the past 3–5 years), and years in business. A restaurant with $1M in revenue might pay $3,000–$8,000/year, while an accounting firm with the same revenue might pay $500–$1,500/year.
What is 'additional insured' status and when do I need it?
Additional insured status extends your GL coverage to another party — typically a client, property owner, or general contractor — protecting them from claims arising from your operations. Many commercial contracts require you to add the client as an additional insured. This is accomplished via an endorsement (ISO CG 20 10 or CG 20 37) to your policy and is evidenced by a Certificate of Insurance (ACORD 25).
Can I get general liability insurance for a one-day event?
Yes — short-term general liability policies (sometimes called 'event insurance' or 'special events GL') are available for single events, typically ranging from $175–$500 per day depending on attendance size, alcohol service, and venue requirements. These are commonly used by vendors, event planners, and contractors working a single project.