What Does General Liability Insurance Cover?

General liability insurance covers your business when it's legally responsible for bodily injury or property damage to a third party, for personal and advertising injury offenses like libel or slander, and for medical payments to people injured on your premises, plus the legal defense costs that come with those claims. It does not cover injuries to your own employees, damage to your own property, or professional mistakes, those need separate policies.

Here's how the standard Commercial General Liability (CGL) policy actually works, based on the ISO form used by most insurers. The standard form is written on an occurrence basis, our guide to occurrence vs. claims-made policies explains how that coverage trigger works.

Commercial General Liability (CGL) Insurance

Commercial general liability insurance covers a business's legal responsibility for bodily injury or property damage to third parties, personal and advertising injury offenses, and medical payments to people injured on its premises, along with the legal defense costs those claims bring. It does not cover employee injuries, damage to the business's own property, or professional mistakes.

What are the three coverage parts of a CGL policy?

Section I of the CGL coverage form is split into three distinct coverages, each with its own insuring agreement and exclusions:

Coverage C is the quiet workhorse here: because it pays regardless of fault, it lets you resolve small injuries quickly before they turn into lawsuits.

What business activities does Coverage A actually reach?

Coverage A is broad. It follows six distinct liability exposures your business creates every day:

• Premises liability: you must keep your premises reasonably safe for visitors. Applies to owners, landlords, and tenants alike.
• Business operations liability: injuries or damage caused while you're performing work, often on someone else's premises (a repair tech drops a tool and injures the customer).
• Products liability: a product you sold, distributed, or manufactured causes injury after it leaves your premises (the improperly washed eggs in a bakery's cake, in the classic example).
• Completed operations liability: damage that shows up after your work is finished and put to use.
• Contractual liability: liability you take on by holding another party harmless in a contract, such as a construction agreement or lease.
• Contingent (vicarious) liability: when you're held responsible for the actions of people acting on your behalf: employees, and sometimes independent contractors and vendors.

One note for restaurants and retailers: the standard products definition assumes injury happens away from your premises. If customers consume your product on-site, a restaurant being the obvious case, the Products/Completed Operations Hazard Redefined endorsement (CG 24 07) removes that requirement so a patron made ill by food eaten at your tables is still covered.

Who counts as an "insured" under the policy?

More people than just the business named on the declarations page. The CGL automatically extends insured status based on your entity type:

• Sole proprietor: you and your spouse, for the conduct of the business
• Partnership or joint venture: the entity, partners, members, and their spouses
• LLC: the entity, its members, and its managers (for their duties as managers)
• Corporation: the entity, executive officers, directors, and stockholders (within their roles)
• Employees and volunteer workers: for acts within the scope of their duties, with important carve-outs

Newly acquired or formed organizations get automatic coverage too, but only for 90 days or until the policy period ends, whichever comes first, and never for injuries that happened before the acquisition.

What does general liability insurance not cover?

This is where businesses get surprised. The CGL protects others from you, not you from yourself. Injuries to your own employees, damage to your own property or work, and professional mistakes are all excluded and belong on separate policies. The CGL excludes, among other things:

• Injuries to your own employees: that's the job of workers compensation insurance. An employee swinging a ladder into a co-worker's face is not a CGL claim.
• Professional services: advice, design, health care, and similar professional acts need professional liability (E&O) coverage. Even an on-site company nurse administering an injection falls outside the CGL.
• Damage to your own property or your own work: repairing or redoing your own work is a business risk, not a covered third-party loss.
• Electronic data: property damage applies only to tangible property, and the policy's definitions exclude electronic data from that category. Cyber liability insurance fills this gap.
• Expected or intended injury, pollution, aircraft/auto/watercraft, liquor liability (for businesses in the alcohol trade), and other exposures with their own dedicated policies.

How much does general liability insurance cost?

Premiums are driven by a handful of rating factors:

• Industry risk class: the classification assigned to your operations
• Payroll and revenue: the premium basis most classes are rated on
• Claims history: past losses follow you into future pricing
• Policy limits: higher limits cost more
• Location: where you operate affects both rates and legal environment

A low-risk office business might pay a few hundred dollars a year, while contractors and food-service businesses pay more because their premises, operations, and products exposures are larger. The only reliable number is a quote rated for your actual operations, which is exactly what an independent broker does across multiple carriers.

How to buy the right CGL policy

Work through these four steps before binding coverage:

1. Map your exposures

   List where you operate, what you sell, what contracts you sign, and who visits your premises. Each maps to one of the six Coverage A exposures above.

2. Set limits that match your contracts

   Many commercial leases and construction contracts specify minimum liability limits and require you to add other parties as additional insureds. Pull those requirements before quoting.

3. Review the endorsement schedule

   Endorsements can broaden or narrow the standard form. Confirm nothing on the schedule strips coverage your operations depend on.

4. Coordinate with your other policies

   The CGL's exclusions are intentional hand-offs to workers comp, commercial auto, professional liability, and cyber policies. Gaps appear where the hand-off isn't made.

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.