General Liability
General liability is the foundation of every commercial insurance program. It pays when someone outside your business gets hurt or has property damaged because of something your business did. Most clients we write start here.
What it is.
Commercial General Liability (CGL) is what landlords ask for, what most contracts require, and what shows up on every certificate of insurance. The policy has a per-occurrence limit (the most paid for one incident) and an aggregate limit (the most paid for all incidents in a policy year). Standard small-business limits are $1M per occurrence / $2M aggregate.
GL covers three big categories: bodily injury and property damage to others, personal and advertising injury (libel, slander, copyright infringement in advertising), and medical payments to people injured on your premises. It does NOT cover damage to your own property, employees getting hurt (that's workers comp), professional advice gone wrong (that's E&O), or damage to a customer's property in your care (that's bailee or BPP).
Below is what each layer of a typical GL policy actually pays for, the common gaps that send small businesses to specialty endorsements, and how the certificate of insurance fits into all of it.
Any business that interacts with customers, vendors, the public, or has a physical location. Almost every commercial lease and most client contracts require it.
What it covers.
Each policy is a stack of named coverages. Required parts are mandated by state law. Recommended parts are what we put on most policies. Optional parts depend on your situation.
Bodily Injury Liability
Pays defense costs and settlements when a third party is injured because of your business operations. The classic example: customer slips on a wet floor in your shop. Pays their medical bills and any legal claim.
Property Damage Liability
Pays when you or your operations damage a third party's property. Contractor knocks over an antique vase at a client site. Plumber's pipe burst floods the unit below. This is where most contractor claims live.
Personal and Advertising Injury
Covers claims of libel, slander, copyright infringement in your advertising, false arrest, malicious prosecution. Often overlooked but increasingly relevant for any business doing online marketing.
Medical Payments
Pays small medical bills (usually $5,000 to $10,000 per person) for someone injured on your premises regardless of fault. Settles small incidents before they turn into liability claims.
Products and Completed Operations
Covers claims arising from a product you sold or work you completed AFTER you've finished and left the site. A roofer's roof leaks 6 months later and damages the homeowner's interior. That's a completed-ops claim.
Damage to Premises Rented to You
Covers damage you cause to a space you're renting (often $50,000 to $500,000 sub-limit). Required by most commercial leases. Different from damage to your OWN property which is BPP coverage.
Additional Insured Endorsement
Adds a third party (landlord, general contractor, client) as an additional insured on your policy so they get the benefit of your coverage when they're vicariously named in a suit. Required by most contracts. Usually a few hundred dollars per AI.
Waiver of Subrogation
Prevents your insurer from recovering against a third party (often a client) after paying a claim. Required by some contracts (usually GCs and large clients). Adds to premium.
Hired and Non-Owned Auto
Covers liability when an employee uses their personal car or a rented car for business. Often missing on standalone GL but should be there or on a separate auto policy. We catch this gap on most reviews.
Excess / Umbrella Liability
Sits on top of your GL (and other liability lines) to provide additional limits when a single claim exceeds your underlying policy. Often $1M to $5M of additional coverage for surprisingly modest premium.
When it kicks in.
Real situations we see in the agency. The point is to show how each layer of coverage maps to actual life, not to scare you.
Customer slips on wet floor
Mop bucket left in a retail aisle. Customer slips, breaks a hip, ER visit, surgery. GL pays the medical bills, the lost-wages claim, and your legal defense. Most carriers will defend even if the claim is later denied.
Roofer puts a foot through a ceiling
While walking a roof, the roofer's foot punches through into the homeowner's bedroom below. Property Damage Liability pays the repair plus any contents damaged.
Restaurant employee knocks over a customer's wine
Server bumps a customer's table, glass tips over a $4,000 laptop. Property Damage Liability pays the laptop replacement.
Social media post triggers a copyright claim
A marketing employee uses a stock photo without proper licensing. The photographer sends a demand letter for $25,000. Personal and Advertising Injury covers the legal defense and settlement.
Subcontractor injures a homeowner
A sub working on your job damages property or injures someone. Whether YOUR GL pays depends on whether the sub had their own coverage and whether your policy excludes subs. We catch this on every contractor review.
Key terms.
Plain-English definitions. The vocabulary insurance carriers assume you already know.
- 01Per-Occurrence Limit
- The most the policy pays for a single incident. Standard small-business limit is $1 million.
- 02Aggregate Limit
- The most the policy pays for all incidents combined during the policy year. Usually 2x the occurrence limit.
- 03Certificate of Insurance (COI)
- A one-page document proving your insurance is in force. Provided to clients, landlords, and GCs as proof of coverage. Free from your carrier. Doesn't change the policy, just summarizes it.
- 04Additional Insured
- A third party (landlord, GC, client) added to your policy so they get the benefit of YOUR coverage when they're sued because of YOUR work. Usually free or a small fee per AI.
- 05Occurrence vs Claims-Made
- Occurrence policies cover incidents that HAPPEN during the policy period regardless of when the claim is filed. Claims-made covers incidents reported during the policy period, regardless of when they happened. Most GL is occurrence-based.
- 06Subcontractor Exclusion
- Some GL policies exclude work done by subcontractors unless the subs carry their own GL with similar limits. A common, expensive surprise on contractor policies. Confirm before you buy.
Common questions.
Questions clients ask before they get on the phone with AJ. If yours isn’t here, just call.
Probably yes if you ever interact with clients (in person or on their property) or if any contract you sign requires it. Premium for a small home-based service business is usually $400 to $700 a year for $1M/$2M.
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