Commercial General Liability Insurance for Small Business

What is general liability insurance coverage?

Insurance plays an important role in our modern world. Small business owners should carry several different lines of insurance, including general liability insurance.

Why would a small business need general liability insurance?

Simply put, it is insurance coverage for some of the more common risks a business incurs during normal operations. If your team is working at a customer’s home installing new carpeting and one of the workers knocks something over and breaks it, your general liability insurance will pay for the damages.

That’s just a basic example. Commercial general liability insurance is also necessary for other instances, like signing a lease on a new location or signing a work order contract. Sometimes lenders require a general liability insurance policy to be in place before they’ll extend funding.

Is general liability insurance required by law?

No, most states don’t mandate general liability insurance for small businesses. However, they may require businesses within specific, high-risk industries to carry it. These can include the following:

Construction
Roofing
Residential and commercial cleaning
Cannabis

The industries listed above are just a few of the many that often require general liability insurance under state law. You’ll need to know the specifics in your state.

However, even if your state doesn’t mandate general liability insurance coverage for your business, it may still be a good idea – or even necessary to operate.

For instance, did you know that clients, vendors, mortgage companies, landlords, and even online sales platforms like Amazon can require that you carry general liability insurance before they’ll work with you?

It’s all about peace of mind. That lender or landlord wants to know that if you get sued, they won’t find themselves paying the costs. General liability insurance delivers that protection.

Do I need general liability insurance?

At Kickstand Insurance, we believe that all businesses benefit from carrying general liability insurance. It’s an important layer of protection between your business and common risks you’ll face during daily operations.

However, some businesses have a greater need for this protection than others based on their operations, how their services are delivered, and other factors. To determine whether you need general liability coverage, answer the following questions:

Do you work with customers directly?
Do customers enter your place of business?
Is there a chance that someone from your business will damage customer property, in any way, at any time?
Do you operate in a physical location where customers, vendors or suppliers might be injured?
Do you advertise your products or services?

If you answered “yes” to any of those questions, then you need general liability insurance. Even if you didn’t, it’s still a smart purchase.

What does commercial general liability insurance cover?

General insurance for business can cover many common risks your company faces each day. That can include the following:

Bodily injury
Property damage
Damage to premises rented to you
Personal & Advertising Injury
Medical payments

As you can see, general liability coverage offers wide-ranging protection. However, it is not the only type of insurance you’ll need. Some of the areas it doesn’t cover include the following:

Professional Errors

Have you missed a deadline? Did a service go undelivered? Professional mistakes are not covered by general liability insurance. You’ll need professional liability insurance here.

Employee Injuries

While general liability insurance will cover customer injuries, it does not cover employee injuries. That’s where your workers’ compensation policy comes into play.

Stolen/Damaged Business Property

You’ll need a property policy which can often be found in a BOP, also known as a business owner’s policy to pay for stolen or damaged business personal property (property owned by your business).

Business Vehicle Damage

Damage to a business vehicle your company owns is covered by commercial auto insurance, not general liability insurance. Damage caused by a vehicle not owned by the business but being used for business purposes such as an employee’s car can sometimes be protected with Hired & Non Owned Insurance which can typically be added to a General Liability policy.

Does general liability insurance cover independent contractors?

Yes! Independent contractors provide essential services across a wide range of industries and, like any other business, can be sued. General liability insurance provides protection and peace of mind for these professionals just like it does for small businesses and even larger firms.

Of course, there’s a lot of ambiguity here. For instance, why might a general contractor without a physical location, expensive equipment, or physical products need this type of insurance?

general liability insurance can protect you against law suit

After all, without a physical location, you don’t even need commercial property insurance. Without a traditional business structure, you might not need a business owner’s policy.

All of that is true, but if you’re in business and provide services, interact with customers, or advertise your offerings, you can still be sued. Defending against that risk is the entire point of general liability insurance.

What if you can’t afford a policy of your own or it doesn’t make sense to pay for one outright? It’s possible to ask a client to add you to their policy. This arrangement offers the coverage you need without the costs of buying your own policy.

Of course, doing that will increase your client’s premiums, so you’ll need to offset that by paying the difference in the increase.

How much general liability insurance do I need?

Determining how much coverage you need can be tricky, particularly for small business owners and independent contractors. There are two ways to do this:

If you’re purchasing general liability insurance for a specific reason, such as a contract, make sure that your coverage satisfies the insurance requirements of the contract.
If you’re purchasing coverage for other reasons, then it needs to match your business requirements. The goal here is to ensure your policy will pay for a lawsuit in the case you are taken to court. This will require factoring in the size and value of your business, the number of employees you have, and your business operations.

While there is no single answer that fits every business’s needs, the average for small businesses is $1 million per occurrence / $2 million in aggregate. This type of policy will pay out up to $1 million in a single instance but is limited to $2 million for the policy’s lifetime, which is usually a single year.

High-risk and high-revenue businesses should consider increasing their coverage. This can be done through umbrella insurance.

Note: Many business owners attempt to reduce their insurance costs by setting a high deductible. The problem is that if the deductible isn’t affordable, you may not be able to use it. That negates the protection offered. Make sure your deductible is affordable so you can use it when necessary.

How to get general liability insurance

Obtaining general liability insurance is relatively simple but may require time and effort. You’ll need to work with an agent and it’s often wise to shop around to find the best deal. That usually means getting multiple quotes and then studying each line on the various policies to ensure that you’re comparing apples to apples.

At Kickstand Insurance, we believe in offering affordable protection you can rely on. Getting a quote is simple and fast – it takes just 5 minutes to complete our online form and one of our commercial insurance experts will contact you to fine-tune your coverage.

Getting a quote on general liability insurance will require some basic information, including the following:

Your business name
Your geographic location
Your business operations
The number of employees within your business
Your estimated annual revenue and payroll
Your length of time in business/industry experience

Ready to get started? Complete our online form now! You’ll receive your no-obligation quote quickly, and we can usually provide coverage on the same day. Most traditional agents can take weeks to finalize coverage and provide your certificate of insurance (COI).

FAQs

Does commercial general liability insurance cover automobile liability?

No, it does not. If your business owns an automobile, you’ll need commercial auto insurance to cover this type of liability, as well as auto accidents and related concerns.
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Does commercial general liability insurance cover business interruption?

All businesses face the risk of interruption due to natural disasters, emergencies, and other unforeseen circumstances. General liability insurance does not protect against this. You’ll need a business interruption policy, often part of a property policy.
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Does commercial general liability insurance cover property damage?

Yes, general liability insurance covers property damage if someone from your business damages a customer’s property. However, it does not cover damage to property that your business owns. That protection comes from a property policy which is often part of a business owner’s policy.
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Does commercial general liability insurance cover employee injury?

If an employee is injured on the job, you’ll need a workers’ compensation policy. General liability insurance does not cover workplace injuries. Kickstand Insurance can provide affordable workers’ compensation protection for small businesses in almost any industry – get a free quote in just minutes!
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Does commercial general liability insurance cover personal injury?

Yes, your general liability policy will cover personal injury to a customer. This is an important consideration for any small business, as well as for subcontractors and independent contractors.
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Does commercial general liability insurance cover breach of contract?

While clients, vendors, suppliers, and business partners might require you to have general liability insurance before they’ll sign a contract with you, this insurance does not protect against a breach of contract lawsuit. That type of protection comes from professional liability coverage, also called errors and omissions insurance.
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Does commercial general liability insurance cover subcontractors?

Yes and no. Subcontractors should carry their own general liability insurance. A small business’s policy will cover the business and that business’s employees but doesn’t usually extend to subcontractors hired by the business. However, contractors’ general liability insurance usually does cover subcontractors, although it can be costly for the business in question. It’s usually more affordable to require all subcontractors you hire to provide proof that they have general liability insurance.
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Is general liability insurance the same as hazard insurance?

No, these are two different types of insurance. General liability insurance would cover your business against a customer’s slip-and-fall accident, but hazard insurance would protect against theft of equipment that the business owns.
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Is general liability insurance the same as public liability insurance?

While they are similar, public liability insurance and general liability insurance are not identical. Public liability insurance protects your business against claims from the general public. General liability insurance, on the other hand, offers broader coverage and is a better fit for modern businesses.
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What is the difference between general liability and professional liability insurance?

Both general liability insurance and professional liability insurance are important for small businesses and independent contractors. General liability insurance covers physical risks, like property damage. Professional liability insurance, on the other hand, protects against things like errors or omissions in service delivery.
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What is the difference between general liability insurance and workers’ comp insurance for small business needs?

General liability insurance does not cover workplace injuries to employees. Instead, your business will need a workers’ compensation policy. Most businesses in the US are required to carry workers’ compensation, with some exceptions. Note that these exceptions vary by state and by industry. It’s important to know the rules that apply to your business. However, we recommend that all businesses, independent contractors, and even sole proprietors carry workers’ compensation insurance.

General Liability Insurance