Coverage
What does general liability insurance cover (and not cover)?
General liability is the policy most commonly requested in leases and contracts, and also one of the most misunderstood. Business owners often assume it covers anything that goes wrong. It does not. Here is a plain list of what it usually pays for, what it excludes, and which policy fills each gap.
What general liability covers
A standard policy responds to claims from third parties, meaning people outside your business. Coverage typically includes legal defense, settlements and judgments up to the policy limits.
- Bodily injury to others: a customer slips in your shop and breaks a wrist.
- Property damage to others: a landscaper’s mower throws a rock through a client’s window, or a cleaner knocks over a customer’s television.
- Products and completed operations: a product you sold, or work you finished, later causes injury or damage.
- Personal and advertising injury: claims of libel, slander, false advertising, invasion of privacy or copyright infringement in your advertising.
- Medical payments: small no-fault payments for minor injuries to visitors, often with limits around $5,000, which can resolve incidents before they become lawsuits.
What general liability does not cover
Each exclusion below is a common reason claims are denied. Most have a dedicated policy that fills the gap.
| Not covered by general liability | Coverage to look at |
|---|---|
| Injuries to your own employees | Workers’ compensation |
| Accidents in vehicles you own or that are driven for business | Commercial auto; hired and non-owned auto |
| Damage to your own building, equipment or inventory | Commercial property or a business owner’s policy |
| Financial loss from your advice, mistakes or missed deadlines | Professional liability (E&O) |
| Data breaches and cyberattacks | Cyber insurance |
| Customer property in your care, custody or control | Bailee or inland marine coverage |
| Intentional harm, pollution and many contractual liabilities | Specialized coverage, if available |
Does general liability cover employee injuries?
No. General liability covers injuries to people outside your business. If an employee is hurt on the job, workers’ compensation is the coverage designed to pay medical bills and lost wages, and most states require employers to carry it once they reach a certain number of employees. Employer’s liability, which comes with most workers’ compensation policies, handles related lawsuits.
A subcontractor’s injury is a gray area. If the subcontractor lacks its own workers’ compensation, some states can treat their workers as yours for premium or claim purposes. Collect certificates of insurance from subcontractors before work starts.
Limits, deductibles and how claims are paid
Most small businesses buy a $1 million per-occurrence limit and $2 million aggregate, according to Insureon’s customer data. The per-occurrence limit is the most the policy pays for a single claim; the aggregate is the most it pays in the policy year. Many general liability policies pay defense costs in addition to the limits, but check your policy wording, since some forms erode the limit with legal costs.
General liability is usually written on an occurrence basis, meaning it covers incidents that happen during the policy period even if the claim is made later. That is different from many professional liability policies, which are claims-made.
Endorsements clients often ask for
Contracts frequently require more than a basic policy. Additional insured endorsements extend your coverage to the client for claims arising from your work. A waiver of subrogation stops your insurer from pursuing the client to recover a claim. Primary and non-contributory wording means your policy pays before the client’s own insurance. Ask for these when you buy the policy, because a certificate alone cannot add them.
Frequently asked questions
Does general liability cover theft?
Not theft of your own property; that falls under commercial property coverage. General liability may respond if you are accused of damaging or losing a third party’s property, subject to exclusions for property in your care, custody or control.
Does general liability cover mistakes in my work?
Not financial losses from professional errors or bad advice. That is professional liability (errors and omissions) insurance. General liability is about physical injury and property damage.
Does general liability cover my car accidents?
No. Auto accidents are excluded. Vehicles your business owns need commercial auto coverage, and employees driving their own cars for work call for hired and non-owned auto coverage.
Figures are third-party estimates and examples, not quotes. Coverage depends on the policy terms and underwriting, and rules vary by state.