General Liability Insurance

No matter what kind of business you run, it needs protection from all kinds of threats, including lawsuits. Though harm to the public by your business could be purely accidental, your business can still get sued for it — and lose a lot of money without the right coverage. That’s why having general liability insurance is so important.

Fortunately, an independent insurance agent can help you find the right type of business liability insurance to protect your business against lawsuits and legal troubles. But first, let's take a deep dive into business liability insurance and find out what it's all about.

What Is Liability Coverage?

Liability insurance is a type of coverage that protects the insured against lawsuits and legal claims of bodily injury or property damage caused by the business or other entity. The right liability insurance reimburses the policyholder for legal costs, including attorney, court, and settlement fees, regardless of whether they're actually at fault. Coverage also protects against advertising, emotional injuries, and more.

Who Sells Business Liability Insurance?

Business liability insurance is available from many different insurance companies, and the best way to find the right carrier for you is by working with an independent insurance agent. Independent insurance agents know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.

While many insurance companies could provide business liability insurance for you, finding coverage could also depend on the area you live in. Here are a few of our top picks for business liability insurance.

Top Business Liability Insurance Companies	Star Ratings
The Hartford
Nationwide
Progressive
Farmers
Hiscox

What Does General Liability Insurance Cover?

General liability insurance provides important legal protection for businesses of all kinds across the country. Policies offer reimbursement for the following:

Claims relating to bodily injury: If a third party, such as a customer, slips and falls on your business premises or otherwise injures themselves and blames you, general liability insurance will reimburse for legal costs.
Claims relating to property damage: If a third party, such as a customer, claims to have had their personal property damaged as a result of your business, general liability will reimburse for legal costs.
Claims relating to advertising injury: If your business’s advertisements cause some sort of harm to a third party, such as emotional harm, general liability insurance will cover the legal costs.
Medical payments: General liability insurance will also cover medical costs stemming from injured third parties on your business premises, or who claim to have been injured by your business’s operations. Coverage kicks in regardless of actual fault.

Personal liability situations:

Property damage: This can include claims costs if you damage someone else's property.
Medical payments: Payments resulting from accidents that occur on your premises or because of your operations.
Personal & advertising Injury: If you're sued for libel or slander, this could provide coverage for those claims.

An independent insurance agent can help you find the general liability insurance that best works for your unique business’s needs.

General Liability Coverage Examples

General liability is a crucial part of any business insurance package. Here are just a few important examples of coverage in action.

Coverages provided under general liability insurance

Third-party bodily harm or property damage caused by your business
Advertising injuries and copyright infringement caused by your business
Customer or other third-party medical treatments due to injury by your business
Rented property damage caused by many threats, such as fire and lightning
Reputational harm caused by your business, such as libel or slander
Privacy violations by your business

Business liability insurance has many crucial uses for companies of all kinds.

How Much Does Business Liability Insurance Cost?

Liability insurance for businesses can range in price depending on numerous factors. Check out the chart below for average premiums for general liability insurance paid by consumers in recent years for a better estimate.

Average cost for B2C general liability insurance premiums in the United States from 2019 to 2024 (in US dollars)

In recent years, the average premium for general liability insurance was $340 annually. Looking ahead, premiums are expected to rise to an average of $380 annually. Keep in mind that general liability insurance is just one type of coverage needed by businesses.

To figure out the cost of your specific business liability policy, you’ll have to consider the following factors of your business:

Annual profits
Size of business
Exact location
Specific operations
Risk level
Additional coverages

Some professions pay a lot more for their general liability coverage than others. For example, construction workers tend to pay much more for their liability insurance than food truck operators. Your independent insurance agent can help you find quotes and exact figures for business liability coverage in your area.

How Liability Insurance Works

Liability insurance is also called third-party insurance and protects businesses against claims of property damage or bodily injury by third parties.

DID YOU KNOW?

Intentionally malicious or criminal acts aren't covered by liability insurance.

Liability coverage protects businesses from hefty legal fees in the event of a lawsuit against them.

Why Do You Need Business Liability Insurance?

As a business owner, you can be sued at any time for any reason. Even a customer slipping could cost you thousands of dollars in medical expenses if they get injured. And there’s always the possibility that you’ll be sued for additional damages.

Medical bills and other related expenses are a lot to cover for a small business. And they’re just the tip of the iceberg if you are sued in such a situation. Attorney fees, court costs, and court-ordered settlements or judgments can easily bankrupt your business if you lack the right coverage.

What Are Some of the Most Common Business Lawsuits?

You might not think a lawsuit will ever be filed against your business, but unfortunately, it could happen. Regardless of your operations, a customer or other third party could find practically anything to sue you over. Here's a look at some of the most common business lawsuits in recent years.

Share of pending litigation against companies in the United States, by type

In recent years, labor or employment lawsuits were by far the most commonly filed type of litigation filed against companies, at 48% of all cases. Labor/employment claims can include discrimination, sexual harassment, wrongful discharge, and more. The next highest were contracts lawsuits, at 43%, for claims that a business failed to uphold its end of a contract. Product liability cases came in at seventh-highest, at 12%, involving claims of a business's products causing harm.

Knowing some of the most common types of lawsuits filed against businesses can help your company better prepare itself against possible litigation. For starters, work together with an independent insurance agent to get covered with all the commercial liability insurance you need.

Which Industries Are Most Prone to Lawsuits?

The industries that face the most civil lawsuits may surprise you. If your business falls into one of these categories, you'll want to have extra liability protection:

Top five business industries with the most lawsuits:

Construction: Believe it or not, lawsuits faced by the construction industry most frequently are contract lawsuits. If a construction company doesn't finish a project on time or as promised, customers are likely to sue them for it.
Healthcare: The lawsuits that plague the healthcare industry are more on the professional liability end. Claims of misdiagnosis, malpractice, incorrect prescriptions, and much more are filed against the industry on a regular basis.
Casino: This list entry may be a surprise, but casinos get slapped with lawsuits all the time for multiple reasons. Some of the biggest casino lawsuits are over claims of broken machines that eat customers' money, as well as slips, trips, and falls on floors or over machinery, and even inadequate security staffing.
Retail: Perhaps much more expected, the retail industry gets hit with all kinds of lawsuits relating to the mistreatment of customers and employees alike. Claims of discrimination, unequal pay, and premises injury are extremely common.
Manufacturing: You might suspect that manufacturing businesses get sued a lot for employee injuries, but they're most commonly hit by lawsuits for faulty or defective products. Defective products can cause business setbacks, injury, or even death to the public, and are a huge liability.

Even if your business's niche doesn't appear on this list, it's still critical to be covered by at least general liability insurance. But if your industry is one of the top five most commonly sued, you might want to consider adding commercial umbrella insurance to further protect yourself against pricey lawsuits.

The Types of Businesses That Don't Get Sued Often

Businesses that don't get sued nearly as often as others don't necessarily belong to a specific industry. Rather, these businesses adopt procedures that protect them from common lawsuits by doing the following:

Honoring their contracts: Contract-related lawsuits are some of the most commonly filed against businesses of all kinds. Businesses that ensure their contracted projects are completed correctly and on time are the least likely to get sued over these issues.
Maintaining a safe environment: Slips and falls and other customer injuries are also one of the biggest lawsuit threats to many businesses. Companies that have carpeted flooring have less risk of customer slips, as well as those that ensure their premises are otherwise mostly trip and injury-proof.
Treating employees fairly: Employee lawsuits for claims of wrongful termination, discrimination, harassment, and more plague all kinds of industries. That's why businesses that go the extra mile to make sure their employees are treated equally and with respect face the least lawsuits in that category.

One of the biggest themes running through businesses with the least amount of lawsuits is respect. Showing respect for their contracts, customers, and employees alike tends to protect businesses from many different types of litigation. Beyond that, however, it's just a huge bonus for your business's reputation and overall longevity to adopt these practices.

What Does Commercial General Liability Insurance Cover?

Commercial general liability policies cover three main types of liability exposures and resulting lawsuits:

Premises and operations exposures: Claims against your business will be covered for bodily injury and property damage related to the ownership and maintenance of the business premises, or as the result of business operations conducted both at and away from the business premises.
Products and completed operations exposures: Claims will be covered for bodily injury and property damage that result from faulty products or completed operations (work performed by your business).
Indirect/contingent exposures: Claims resulting from the negligent actions of independent contractors and subcontractors that you hire will be covered.

There are three types of claims for which you will receive payment from the insurance company:

Accidental bodily injury or property damage that your business is legally responsible for
Personal injury or advertising injury that the business is found legally responsible for
Medical expenses for individuals injured on the premises of the business or by the business operations, regardless of fault

An independent insurance agent can further explain how and when general liability insurance covers your business.

What Isn't Covered by General Liability Insurance?

While general liability coverage is quite comprehensive, not every type of liability exposure is covered. After examining the exclusions, you might find gaps for which you have to purchase additional coverage.

Here are some of the most common general liability exclusions:

Liability claims that are covered under other types of insurance policies, including workers’ compensation, professional liability, commercial auto liability, and directors and officers liability coverage
Pollution liability claims
Claims resulting from damage to the property of others that is in the care, custody, and control of the business (e.g., vehicles at an auto repair shop)
Product recall liability claims
Any legal actions that do not involve a claim for bodily injury, property damage, personal injury, or advertising injury
Most contract disputes
Actions by a governmental agency related to failing to follow regulations
Claims for back taxes
Failure to provide a safe workplace
Professional negligence, or errors and omissions claims

Business owners can purchase other types of liability policies to fill any gaps that they have, or you can often add endorsements to your general liability policy for certain types of liability coverage.

Is General Liability Insurance Required by Law?

General liability insurance may not be legally required by your state, but it's imperative to be covered from a responsibility standpoint. Without the right liability protection, your business could go bankrupt after just one hefty lawsuit, which could be impossible to predict.

Other Types of Business Liability Insurance

Commercial general liability policies offer broad protection, but do not protect you from just any type of lawsuit. Depending on the type of work you do, you might need additional liability policies or endorsements.

An independent insurance agent can help you assess your need for additional liability coverage, such as:

Cyber liability insurance: Pays for costs related to a cyber breach and legal costs if a customer or supplier who was harmed by the breach sues you. Cyber liability cases plague all kinds of businesses today since most require the use of computers at least to complete transactions, which leaves them vulnerable to hacking and other attacks.
Employers liability insurance: Protects employers from financial loss if a worker has a job-related injury or illness that's not covered by workers' compensation insurance. This insurance is especially important in industries where worker injuries are common, like in the restaurant industry.
Employment practices liability insurance: Covers your business against accusations of illegal employment practices such as discrimination and wrongful termination. This coverage is crucial for many types of businesses, especially those with a large staff like hotels.
Environmental liability insurance: Covers your business if an accident results in your company polluting the land, water, or air. Coverage is necessary for construction businesses, farms, and others that directly work with elements that could cause pollution.
Errors and omissions insurance/professional liability insurance: Covers against lawsuits arising from negligent professional services or failing to perform professional duties. Coverage is needed by lawyers, accountants, architects, or anyone who provides a service to clients for a fee.
Event liability insurance: Covers the varied exposures related to special events, with coverage tailored to your specific event, from small, one-time events to large, elaborate affairs. Hotels and other venues that host events regularly need this coverage.
Fire legal liability insurance: Covers the insured's legal liability in cases where a tenant causes fire damage to a rented property. This coverage is often included in a business's commercial general liability insurance.
Liquor liability insurance: Covers bodily injury or property damage caused by a business contributing to a person’s intoxication, giving alcoholic beverages to a person under the legal drinking age, or violating laws or regulations relating to the sale, gift, distribution, or use of alcoholic beverages. A business can be sued for the destruction caused by an intoxicated patron even after they leave the establishment.
Media liability insurance: Covers claims of defamation, invasion of privacy, infringement of copyright, and plagiarism specifically for media companies such as publishers and broadcasters. With the increase in online publications, this coverage has become more important than ever because articles and other forms of media can be shared with ease.
Premises liability insurance: Covers third-party damage, injuries, or illnesses that occur due to an accident on your business property. Premises liability coverage is typically included in a general liability policy and is especially important for industries with a high volume of customer injuries, like retail and restaurants.
Product liability insurance: Covers third-party damage, injuries, or illnesses caused by a defect in a product your company produces, sells, or promotes. The manufacturing industry relies on this coverage often because they are commonly hit with defective product lawsuits.
Public liability insurance: Covers injuries, accidents, and property loss suffered by members of the public (e.g., customers, visitors, and delivery personnel) on your business premises. This coverage is a part of commercial general liability insurance.

Work together with an independent insurance agent to get your business equipped with all the forms of liability coverage it needs to protect against all types of lawsuits you may be most vulnerable to.

Extend Your Business's Coverage with Professional and Limited Liability Insurance

Your business's coverage can be topped off with even more protection offered by professional liability insurance and limited liability company (LLC) insurance. LLCs allow business owners to separate their personal assets from their business, but they don't protect the business itself against various claims.

LLC insurance can protect your company against different types of lawsuits. Professional liability, on the other hand, is important to guard your business against unintentional professional errors that cause harm to others, which in turn can get you sued.

The amount of business liability insurance you need will depend on several factors, including the kind of business you have and its operations and risk level. An independent insurance agent can help you assess your business's risks and get set up with all the coverage you need.

The cost of your business liability insurance will vary based on your business's size, operations, risk level, and more. However, the average cost of general liability insurance alone for businesses is about $350 annually. The cost of all your liability coverage combined could be much higher than this, depending on the type of business you run.

Your business may not be legally required to carry liability insurance. Liability insurance is still a must have for all kinds of businesses, however, because without the proper protection, just one lawsuit could lead to bankruptcy.

Liability insurance covers your business from legal costs in the event of a lawsuit against your company by paying for attorney, court, and settlement fees, regardless of whether you're actually at fault for the claim.

Yes, independent contractors still require liability insurance because they have the same risk of getting sued as a larger company does. Independent contractors need liability protection against lawsuits in the same way as big business entities do.

If you cancel your business liability coverage, you'll be left without valuable and imperative protection from lawsuits against your business. After you cancel your policy, you'll be at risk of paying out of your own pocket for any unforeseen legal claims of bodily injury or property damage to others. You'll have to pay for attorneys and other costs yourself.

The Benefits of an Independent Insurance Agent

When it comes to helping insurance customers find the absolute best business liability coverage, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who sell business liability insurance, deliver quotes from a number of different sources, and help you walk through them all to find the best blend of coverage and cost.

Find an Independent Agent

Find an Insurance Company

What type of insurance do you need?

By Coverage Type

By Business Type

Auto & Vehicle Insurance

Home & Property Insurance

Other Insurance

Insurance Solutions & Resources