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What General Liability Insurance Covers


If you own a business, you may have been told you need general liability insurance. Hopefully, you purchased coverage and now have the protection you need. But you may be wondering what, exactly, that protection entails. What does general liability insurance protect you from?

Here’s a look at what this important product covers.

What Is General Liability Insurance?

Every year, slip-and-fall accidents send about 1 million people to the emergency room, according to the National Floor Safety Institute. If a customer falls in your store or office, you could find yourself dealing with a lawsuit. That’s just one reason to make sure you have sufficient insurance coverage.

Liability insurance protects you against claims made by third parties. However, there are different types of liability insurance, and the types of losses covered vary. General liability insurance is one particular type of liability insurance. It can cover claims of bodily injury and property damage from a third party. It can also cover advertising injury claims.

If you experience a covered claim, your general liability insurance policy can cover medical costs and legal costs, up to the policy limits. General liability insurance may apply in the following situations:

  • An employee causes property damage or bodily injury while performing work at a client’s property.
  • A customer is injured while on your premises.
  • A competitor claims that your advertising includes defamation.
  • An artist claims that your advertising infringes on their copyright.

Why Do You Need General Liability Insurance?

In some cases, state law may require general liability insurance for licensing. For example, in Hawaii, general liability insurance is required to maintain a contractor license.

General liability insurance is also required for many commercial leases. If you rent your business location, there’s a good chance the contract you signed says you need to maintain coverage.

But meeting these requirements isn’t the only reason to purchase general liability insurance. Whenever you interact with customers or engage in advertising, you take on some risk. According to Small Biz Daily, 43% of small businesses say they have been sued or threatened with a lawsuit.

Lawsuits are common in our society, and they can be devastating for businesses. That’s why it’s important to manage these risks with insurance, and general liability insurance is an important part of a risk management strategy.

What Doesn’t General Liability Insurance Cover?

“General” doesn’t mean “everything.” You’ll need to read your policy to see exactly what is and is not covered, as the terms can vary, but you can expect for certain losses to be excluded. For example, general liability insurance typically covers bodily injury and property damage to third parties, not losses that you and your employees experience. Intentional and criminal acts are also typically excluded under many insurance policies.

You may need additional insurance coverage types to cover all of your exposures.

For example …

  • If you own a building, equipment or inventory, you should also carry commercial property insurance.
  • If you drive in the course of your work, you should have commercial auto insurance.
  • If you provide professional services, you may need errors and omissions coverage, also called professional liability insurance.
  • If you have employees, Hawaii law requires you to carry workers’ compensation insurance, and you may also need employment practices liability insurance.
  • If you store sensitive data or use computer systems, you may also want to consider purchasing standalone cyber insurance.

Other types of insurance may be necessary, as well, depending on your exposures. An insurance agent can review your risks and help you obtain the right insurance products.

Need Big Coverage for Your Small Business?

FICOH offers a variety of small business coverage options. Learn more here.