General Liability Insurance Explained: Limits, Costs, and What It Excludes

Coverage A — bodily injury and property damage. A customer slips on your floor; your crew cracks a client's marble countertop; your completed roofing work leaks and damages the interior. This is the bulk of claims.

Coverage B — personal and advertising injury. Libel, slander, copyright infringement in advertising, and wrongful eviction. Small in volume, occasionally large in cost, and increasingly relevant to businesses that market heavily online.

Coverage C — medical payments. A small no-fault benefit, usually $5,000–$10,000, paid for injuries on your premises without any finding of negligence. Its purpose is to settle minor incidents before they become liability claims, and it works well at that.

A typical policy is written $1,000,000 per occurrence / $2,000,000 aggregate. The first figure caps any single claim; the second caps everything the policy pays in the policy year.

Three $800,000 claims in one year exhaust the $2,000,000 aggregate and leave the third partially uninsured. Businesses with high claim frequency — restaurants, gyms, trades with many active jobs — should look at $2 million per occurrence or add an umbrella.

A separate products-completed operations aggregate applies to claims arising from your finished work or products, and it is often the more important limit for contractors, because construction defect claims surface years after the job.

Professional errors. Bad advice, a flawed design, a missed deadline that causes financial loss — these need errors and omissions or professional liability. The most expensive gap for consultants, agencies, architects, and IT firms.

Employee injuries. Those belong to workers' compensation, and general liability contains an explicit employee-injury exclusion.

Your own property and your own work. Damage to your building and equipment needs commercial property cover; the cost of redoing your own defective workmanship is excluded, although resulting damage to other property usually is covered.

Also excluded: vehicles you own or operate (commercial auto), pollution, liquor liability without an endorsement, employment practices claims, and electronic data breaches.

Most commercial contracts require you to name the client as an additional insured, extending your policy to cover them for liability arising out of your work. Landlords, general contractors, and enterprise customers all require it as standard.

Two endorsement forms matter: ongoing operations and completed operations. Contracts frequently require both, and providing only ongoing operations is a common and expensive contract breach.

A waiver of subrogation and primary and non-contributory wording are the other two clauses routinely demanded. Send the actual contract insurance section to your broker before signing — certificates issued after the fact cannot retroactively add endorsements.

Median general liability premium for a small business is roughly $500–$1,200 per year for $1 million/$2 million limits. Low-risk professional offices sit at the bottom; roofing, scaffolding, tree work, and demolition sit far above, occasionally at 5–10% of payroll.

Rating is driven by classification code, revenue, payroll, subcontractor spend, claims history, and the states you operate in. Misclassification is common and expensive in both directions — a wrong code can inflate the premium or, worse, produce a coverage dispute at claim time.

Subcontractors are a specific trap: if you cannot produce certificates of insurance for every sub, the auditor typically charges you as though their payroll were yours. Collect certificates before work starts and keep them for the audit.

A business owners policy bundles general liability with commercial property at a discount and suits most small, low-hazard businesses under about $5 million in revenue. It is usually 10–20% cheaper than buying the parts separately.

A commercial umbrella sits above general liability, commercial auto, and employers liability, adding $1 million or more for typically $400–$1,000 a year. It is the cheapest way to buy large limits and is often required by larger clients.

Layer intentionally: general liability for third-party injury and damage, professional liability for advice and services, workers' compensation for employees, commercial auto for vehicles, cyber for data, and umbrella across the top. Each covers a distinct trigger, and gaps between them are where uninsured losses live.

General liability is normally written on an occurrence basis: it responds to incidents that happened during the policy period, whenever the claim is made. That matters for contractors, where defect claims arrive years later.

Professional liability is normally claims-made: it responds only to claims made while the policy is active, subject to a retroactive date. Let it lapse and past work becomes uninsured unless you buy extended reporting — tail cover — typically at 100–200% of the annual premium.

Never allow a claims-made policy to lapse between carriers. Keep the retroactive date intact when switching insurers; losing it silently uninsures every year of past work.