What Is General Liability Insurance?

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General liability insurance, or commercial general liability insurance, is a type of coverage that can be used by businesses to protect against the risk of financial loss as a result of several events. It covers bodily injury, medical expenses, property damage, libel, slander, defending lawsuits, and more.

Key Takeaways

  • General liability insurance for businesses can protect against risks of financial loss from bodily injury or property damage.
  • Damages from libel and slander lawsuits are also covered.
  • You can purchase general liability insurance through a broader business owner's policy (BOP).
  • A business owner's policy (BOP) bundles several types of insurance coverage into one policy.

How General Liability Insurance Works

Often, a small business may not have the resources to cover liability claims that can arise during normal business operations and that can put it at financial risk.

  • Alternate names: Comprehensive general liability insurance, commercial general liability insurance

General liability insurance, or commercial general liability insurance, protects small businesses from a number of claims that can cause significant expenses, such as claims of property damage, bodily injury, or personal injury from libel or slander.


The cost of general liability insurance will depend on a number of factors, from the amount of coverage you get to the insurance company’s rates. For example, The Hartford insurance company says its customers pay an average of $1,057 per year, or $88 per month, for general liability insurance.

Example of General Liability Insurance

To illustrate how general liability insurance works, say you purchased a policy that costs $88 per month. As long as you make those payments on time, the coverage is in effect.

Then, if your customer sues you for, say, medical expenses as a result of bodily injury while they are on your property, your general liability insurance will likely cover costs related to that claim up to your coverage limits. This way, your business will not have to pay for all the medical expenses and related costs out-of-pocket.

How To Get General Liability Insurance

Small business owners can get general liability insurance through a business owner's policy (BOP), which combines different types of insurance in one policy. In addition to general liability insurance, it may also include commercial property insurance and business income insurance.

Commercial property insurance covers risks to business-owned or rented buildings, inventory and equipment. Business income insurance (business interruption insurance) provides f7unds to pay business bills and employees’ salaries if your business must temporarily close due to a disaster.

Some BOPs also provide crime insurance, which protects businesses from losses resulting from embezzlement, theft, fraud, or forgery.

Another option for buying business comprehensive insurance is through a commercial package policy (CPP), which, like a BOP, provides a variety of coverage, including commercial property, commercial crime, and commercial general liability. In contrast to BOPs, CPPs offer a custom mix of coverage to address specific risks and needs.


Larger businesses will often opt for CPPs because their needs are more complex; however, some small and medium businesses with distinct needs may also choose CPPs.

Other Types of Insurance for Small Businesses

Some other insurance coverage options small businesses should consider are workers’ compensation, commercial auto, and professional liability.

  • Workers’ compensation insurance: Employee work-related accidents, illnesses, or deaths can be costly for a small business. Having the proper workers’ compensation insurance coverage can address this risk. In fact, insurance coverage for medical costs and lost wages for workers who are injured or become ill on the job is mandated by most states. If an owner does not have this coverage, they will be held liable for the associated costs and could be fined or penalized by the state.
  • Commercial auto insurance: If your business uses a vehicle as part of business operations, consider purchasing a commercial auto insurance policy. This policy covers both damages to the vehicle(s) and liability should you or your employee be found at fault for an accident.
  • Professional liability insurance: Small business owners and service providers, such as contractors and freelancers, need to protect themselves from the costs of potential litigation stemming from their client’s claims of professional negligence, errors, or omissions. This insurance would cover the policy owner’s legal expenses and any judgments.

Frequently Asked Questions (FAQs)

What types of insurance are commonly carried by small businesses?

Small businesses commonly purchase business owner's policies (BOPs) because these policies include three to four types of key insurance coverages in one policy to address a variety of risks. BOPs usually include general liability insurance, commercial property insurance, and business income insurance.

What does a crime insurance policy cover?

Crime insurance policies, or commercial crime insurance policies, typically cover losses related to crimes that are not covered in business property insurance. For example, it may cover expenses due to forgery, employee dishonesty, or computer fraud, or because of theft.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Small Business Administration. “Get Business Insurance.”

  2. The Hartford. “What Is Comprehensive General Liability Insurance?

  3. New Hampshire Insurance Department. “Commercial FAQs.”

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