General liability insurance is one of those business essentials that most people know they need but many don’t fully understand. I’ve spoken with small business owners who thought they had comprehensive coverage until a claim came in and revealed significant gaps. The details of your general liability policy matter enormously — here’s what you actually need to know.
What General Liability Insurance Covers
General liability insurance, sometimes called commercial general liability or CGL, protects your business against claims of bodily injury, property damage, personal injury, and advertising injury made by third parties. These are the claims that arise from your business operations, your products, and your premises.
Bodily Injury and Property Damage
If a customer slips and falls at your business location, if your employee accidentally damages a client’s property while performing work, or if your product causes physical harm to a user — general liability covers the resulting claims. It pays for medical expenses, property repair or replacement, and legal defence costs regardless of whether the claim is ultimately found to be valid.
Personal and Advertising Injury
General liability also covers claims arising from libel, slander, copyright infringement in advertising, and invasion of privacy. If a competitor claims your marketing materials defame their product, or if a customer claims your social media post violated their privacy rights, your general liability policy responds to these claims. This coverage is more relevant than many small business owners realise in an era of active social media marketing.
Products Liability
If your business manufactures, sells, or distributes physical products, products liability coverage — included within your general liability policy — protects against claims that your product caused bodily injury or property damage. Products liability applies even after the product has left your possession and can cover incidents involving products you sold years earlier.
What General Liability Does NOT Cover
Understanding the exclusions is as important as understanding the coverage. General liability has meaningful gaps that require separate policies to fill.
Professional Errors and Omissions
General liability does not cover claims arising from professional mistakes, errors in advice, or failure to deliver promised professional services. If you’re a consultant whose advice caused a client to lose money, general liability won’t respond — you need professional liability (errors and omissions) coverage for that exposure.
Employee Injuries
Injuries to your own employees are covered by workers compensation, not general liability. General liability covers injuries to third parties — customers, visitors, and the general public — not your own staff.
Your Own Property Damage
General liability covers damage to others’ property, not to your own. Damage to your business premises, equipment, and inventory is covered by commercial property insurance.
Intentional Acts and Criminal Conduct
Claims arising from intentional wrongdoing or criminal acts are excluded from general liability coverage. Insurance is designed to cover accidental harm, not deliberate misconduct.
Understanding Coverage Limits
General liability policies have two key limit figures that every business owner should understand.
Per-Occurrence Limit
This is the maximum the insurer will pay for any single claim or incident. If your per-occurrence limit is £1 million and a claim results in £1.5 million in damages, you’re responsible for the £500,000 excess.
Aggregate Limit
This is the maximum total the insurer will pay across all claims in the policy year. Once the aggregate limit is exhausted, no further claims will be covered for the remainder of the year. Aggregate limits are typically set at twice the per-occurrence limit, but this varies by policy.
For small businesses, £1 million per occurrence and £2 million aggregate is a common starting point. However, businesses with significant public exposure, contractual requirements from clients, or higher-risk operations should consider substantially higher limits. Many commercial contracts require vendors to carry minimum liability limits of £2 million or more.
Additional Insured Status — A Critical Provision to Understand
Many commercial contracts require you to add the contracting party as an additional insured on your general liability policy. An additional insured has coverage under your policy for claims arising from your work on their behalf. This is a standard business requirement in construction, retail, commercial real estate, and many other sectors.
Make sure your policy allows for additional insured endorsements and that you understand the process for adding them. Failing to add a required additional insured can result in contract termination and potential breach of contract liability.
How Much Does General Liability Insurance Cost?
General liability premiums for small businesses vary widely based on industry, revenue, number of employees, location, and claims history. Retail businesses, offices, and consulting firms typically pay lower premiums. Construction, manufacturing, and businesses with significant public interaction typically pay more, reflecting their higher claim frequency and severity.
For most small professional services businesses, annual general liability premiums start at a few hundred dollars or pounds and increase with revenue and risk exposure. The cost of adequate general liability coverage is modest relative to the financial exposure it protects against — a single significant liability claim can easily exceed years of premium payments.
Working With a Broker to Get the Right Coverage
The details of general liability coverage — specific exclusions, endorsement options, limit structures, and pricing — vary significantly between insurers. A specialist small business insurance broker can help you identify the policy terms that matter most for your specific business, compare options across the market, and ensure that your coverage matches your actual risk profile. The right coverage at the right price is a broker conversation worth having.