Commercial general liability (CGL) is usually the first policy a business buys, and often the one a landlord or client asks for first. It protects your business when someone outside the company says you injured them or damaged their property. Here's what it does, and doesn't, do.
The four things general liability covers
1. Bodily injury
If a customer slips in your office, or someone is hurt because of work you performed at their site, general liability can pay for their medical bills, legal defense and any settlement or judgment, up to the policy limits.
2. Property damage
If your team damages a client's property, such as a contractor cracking a window or a technician damaging equipment, general liability can respond to the claim.
3. Products and completed operations
Claims can arrive long after a job is finished or a product is sold. Products and completed operations coverage responds when something you made, sold or installed causes injury or damage later.
4. Personal and advertising injury
This covers claims like libel, slander and certain copyright or trade dress infringement in your advertising. It's narrower than many owners assume, and it does not cover most intellectual property disputes.
What general liability does not cover
- Your own employees' injuries. That's workers' compensation.
- Vehicles. Accidents involving business vehicles need commercial auto, and employees driving their own cars for work need hired and non-owned auto.
- Professional mistakes. If a client says your advice or services cost them money, that's professional liability (E&O).
- Your own property. Damage to your building, equipment or inventory is covered by commercial property insurance.
- Cyber events. Data breaches and ransomware are generally excluded and need cyber liability.
How much general liability coverage do you need?
A common structure is $1 million per occurrence with a $2 million aggregate, but the right limit depends on your contracts, your industry and what you have to protect. When a contract calls for higher limits, an umbrella policy is often the most efficient way to get there.
The part most businesses miss: your contracts
Many leases and client agreements require more than just "general liability." They may require you to name the other party as an additional insured, make your coverage primary and non-contributory, or waive subrogation. If your policy doesn't include the matching endorsements, you may be in breach of the contract, or paying a claim the other party expected your insurer to handle.
That's why we read the insurance section of your contracts before we quote. It's the easiest gap to close, and the most expensive one to discover after a claim.
General liability vs. a business owner's policy
A business owner's policy (BOP) bundles general liability with commercial property and business income coverage. For many small businesses with standard risks, a BOP is simpler and less expensive than buying the policies separately. Larger or higher-risk businesses usually buy general liability on its own. We compare both in BOP vs. general liability.
Frequently asked questions
Is general liability insurance required by law?
Generally, no state requires general liability for every business. But landlords, clients, lenders and licensing bodies often require it, which makes it effectively mandatory for most businesses.
Does general liability cover my employees?
No. Injuries to your own employees are covered by workers' compensation, not general liability.
This article is general information, not legal or insurance advice. Coverage depends on the terms, conditions and exclusions of the policy issued, and availability varies by state and carrier.