General Liability Insurance: What It Actually Covers

General liability insurance is the foundational policy most small businesses carry, and it exists to cover the most common ways a business can be held responsible for harming someone else or their property — a customer who slips and falls in your store, a tool that damages a client's property while you're working on-site, that category of everyday risk.

Specifically, it typically covers three broad areas: bodily injury to someone other than an employee, property damage you cause to someone else's property, and personal or advertising injury — things like a false claim in your marketing that damages a competitor's reputation, which is a real and more common claim category than most owners expect.

What it does not cover is just as important to understand. It generally doesn't cover injuries to your own employees (that's what workers' compensation is for), damage to your own property or equipment (that needs property insurance), or professional mistakes in the advice or service you provide (that needs professional liability, sometimes called errors and omissions coverage).

The most common gap owners don't realize exists is that a single, large claim can exceed a policy's coverage limit, leaving the business responsible for the remainder out of pocket. Understanding your actual limit, and whether an umbrella policy on top of it makes sense for your specific risk level, matters more than just having a policy at all.

Many landlords, clients, and even some cities require proof of general liability coverage before you can lease space, work on a job site, or get certain permits — meaning that beyond protecting you from an actual claim, the policy is often a practical requirement just to operate in the first place.

The right coverage amount depends heavily on your specific business and risk exposure — a business with regular customer foot traffic or on-site work at other people's properties generally needs more coverage than a low-traffic office-based one — which is exactly the kind of judgment a real insurance broker, not a generic online calculator, is worth having.