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Many catastrophic events can significantly impact the bottom line of a business. For instance, a consumer may slip and hurt themselves in a store, or an employee could accidentally damage a customer’s property. As small as these problems might appear, they can cause a company a considerable amount of financial resources.

This is where general liability comes into play. It’s a type of insurance that covers organizations from these problems and is an essential policy for any enterprise to operate successfully.

General liability—what is it?

Not to be confused with workers’ compensation, general liability keeps a business financially protected from claims involving property damage or physical injury from customers as a result of the company’s operations, services, or products. Without coverage, you may end up paying out-of-pocket or the income of the organization, resulting in significant monetary losses that may create potentially irrecoverable setbacks. Read more about general liability vs workers comp to understand the differences between the two.

Some of the claims that general liability covers are the following:

  • Physical injury. One of the most common claims a business may cause is bodily injury. If a person is injured within the company’s premises, general liability can cover its medical costs.
  • Property damage. Property damage is another relatively common claim where a business could be legally accountable for damages to someone’s property due to employee error or because of the product offered.
  • Copyright infringement. Organizations accused of utilizing another’s work for any area of their business without authorization or compensation may be sued for copyright infringement.
  • Reputational harm. When libelous stories or defamatory statements are released against another company or person, it may lead to reputational harm. In these cases, the affected organizations or individuals may sue the company responsible.

What it doesn’t cover

While general liability does cover many claims, it doesn’t protect against everything. For example, this insurance policy typically won’t cover automobile accidents, employee illnesses and injuries, business property damage, service-related mistakes, and other claims exceeding the policy’s limit. For claims of these natures, you’ll need commercial auto, workers’ compensation, and commercial property policies. But keep in mind that the insurance policy won’t cover intentional, deliberate, and illegal acts.

Why you need general liability

General liability may not necessarily be required to operate by law. However, without the coverage, you’ll leave your company more vulnerable to financially catastrophic costs that can lead to its eventual bankruptcy. After all, facing legal settlements, lawyer fees, and medical expenses is an expensive affair. Moreover, consumers and clients are less likely to trust an organization and do business with them if they aren’t adequately insured.


It’s easy to see why most companies across many industries have general liability coverage. When you get down to it, the policy protects them from various claims that may put a sizable dent in—if not break—their banks. However, before you commit to an insurance provider, make sure you explore your options and compare quotes from different companies first. It will make a difference.