What Does General Liability Insurance Cover?

General liability insurance covers your business when it is legally responsible for bodily injury or property damage to someone else. It also covers personal and advertising injury, such as libel and slander, medical payments for people hurt on your premises, and the cost of defending those claims. It does not cover injuries to your own employees, damage to your own property or professional mistakes, which need separate policies.

Many owners assume their liability policy protects the business against its own losses. It is the other way around: general liability protects other people from your business, not your business from itself. That one idea explains most coverage surprises. The standard commercial general liability (CGL) form, ISO CG 00 01, is written on an occurrence basis, which our guide to occurrence vs. claims-made policies explains. To price a policy for your business, start with Menlo's general liability insurance page.

What are the three coverage parts of a CGL policy?

The CGL has three coverage parts, each with its own insuring agreement and exclusions:

Coverage C does a lot of quiet work. Because it pays regardless of fault, it lets you settle minor injuries before they turn into lawsuits. The usual medical expense limit, though, is only $5,000 per person: enough for an urgent care visit and an x-ray, not a hospital stay.

All three parts include the insurer's duty to defend you. Under the policy's supplementary payments section, defense costs are paid in addition to your limits, so they don't reduce the money available to pay a judgment.

What business activities does Coverage A cover?

Coverage A covers the six kinds of liability a business creates in its everyday work:

• Premises liability: keeping your premises reasonably safe for visitors, whether you own, rent or lease them.
• Operations liability: injury or damage caused while doing your work, often on someone else's property.
• Products liability: injuries caused by products you make, sell or distribute after they leave your premises.
• Completed operations liability: damage caused after a finished job is put into use, such as a water heater that leaks weeks after installation and ruins the customer's floor.
• Contractual liability: liability you take on for another party in a contract, usually an indemnification clause in a lease or construction agreement.
• Contingent (vicarious) liability: your responsibility for people you hire to act for you, including employees and sometimes independent contractors.

Restaurants are a common exception. The standard products definition assumes injuries happen away from the owner's premises, so a guest who gets sick from food eaten in the dining room falls outside it. The Products-Completed Operations Hazard Redefined endorsement (CG 24 07) fixes that and covers someone harmed at the table.

What does general liability insurance not cover?

A CGL policy pays for accidents that injure others, not for costs that land on your own business. Injuries to your employees, damage to your own property or work, and professional errors are all outside it. The most common exclusions are:

• Injuries to your own employees: an injured worker is covered by workers compensation insurance. An employee who swings a ladder into a coworker is not a CGL claim.
• Professional services: advice, design and health care need professional liability (E&O) coverage.
• Damage to your own property or your own work: fixing or replacing your own defective work for a customer is treated as a cost of doing business, not a covered loss.
• Electronic data: property damage means damage to tangible property, and electronic data is not tangible, so cyber liability insurance fills this gap.
• Expected or intended injury, pollution, aircraft, auto and watercraft, and liquor liability: each needs its own policy.

How much does general liability insurance cost?

Most small businesses buy limits of $1,000,000 per occurrence and a $2,000,000 general aggregate, with a separate $2,000,000 products-completed operations aggregate. For that package, Insureon reports its customers pay an average of about $45 per month.^[1] Averages vary widely by trade:

Your price depends on your class of business and the payroll or sales it is rated on. A low-traffic office tenant can pay a few hundred dollars a year, while a roofer or restaurant can pay several thousand. The number to watch is the aggregate, not the per-occurrence limit. Every damages payment during the year comes out of the aggregate, and once it is used up the insurer owes nothing more, including your defense. The Insurance Information Institute notes that smaller or lower-risk businesses can often buy general liability, property and business interruption together in one businessowners policy (BOP).^[2]

Do small businesses need general liability insurance?

Yes, in practice. No state law requires a CGL policy, but commercial landlords write minimum liability limits into leases, often $1,000,000 per occurrence, general contractors ask for proof before subcontractors come on site, and larger clients ask for a certificate of insurance on the ACORD 25 form before they sign. No certificate, no contract.

The claims behind those requirements have grown. In The Hartford's claim studies from 2015 and 2025, slip, fall and customer injury claims doubled as a share of small business claims, from 10% to 20%, and the average small business claim more than doubled, from $20,000 to $45,000, which The Hartford links in part to higher litigation costs.^[3] A home-based sole proprietor is not exempt either: homeowners policies exclude most business liability, so a client hurt during an in-home consultation would be paid out of your own pocket.

This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

What to check before you buy general liability

Before you get a quote, list the limits your leases and contracts require, and after you buy, read the endorsement schedule for designated premises limits. General liability protects your business against injury and damage claims from other people, such as customers and vendors, and pays to defend them. It does not cover employee injuries (workers compensation), damage to your own work, or professional mistakes (E&O).