Small businesses run on tight budgets and it’s important to know where every dollar goes. But some costs cannot be anticipated, so it’s important to protect your business. General liability insurance is a good place to start. What is general liability insurance? According to Hiscox, a general liability insurance company, this type of insurance which is sometimes referred to a “small business general liability insurance” or “commercial general liability insurance,” is engineered to cover your company for claims made by customers, vendors, and others, for damage to property, bodily injury, and personal injury.
That said, what is the overall importance of general liability insurance in 2025 and beyond? A recent report by Ramsey Solutions states that general liability is all about protection. It’s an umbrella that covers a company from a variety of bad things that might happen when a business owner least expects it.
Why Small and Large Businesses Need General Liability Insurance
Running a business might be profitable, but it is not without its risks. Too many things can go wrong. Businesses of all sizes take on risk with inventory, rent, hiring employees, among other aspects of operating a company in the 2020s.
General liability insurance should be thought of as a strong defense. For instance, a football team doesn’t spend all its time on offense. It requires a strong defense too to prevent the other teams from scoring big.
Businesses are no different. A savvy business owner will place a specific focus on offense and defense. General liability insurance is a big part of that overall strategy. Liability insurance can protect a company from unexpected situations that can set it back financially and perhaps even cause it to go bankrupt.
In the 2020s it’s not unusual for people to sue others for seemingly no reason at all other than to score a big financial settlement. All it takes to break the back of a small business is one lawsuit. A reputable insurance agent will see to it that a company is not exposed to the many types of lawsuits that could be lodged against it.
What General Liability Insurance Covers
General liability insurance covers the cost of property damage, bodily injury, and medical costs, when a third party is injured, or their property is damaged. But general liability does not cover everything. These are some of the things it will not cover:
–An employee who gets injured in the workplace
–Damage to the business’ own property
–Poor or negligent workmanship
–Intentional acts and professional mistakes
–Auto accidents
Depending upon the business, additional insurance such as errors and omissions or worker’s comp can be bought to cover some of the things general liability will not. Again, it’s best to go over all your insurance needs with a reputable agent.
The Cost of General Liability Insurance
Says Ramsey Solutions, if a business owner is concerned about the costs of liability insurance, he or she needs to take a good look at the numbers involved. General liability can be bought for anywhere from a few hundred dollars per year to a few thousand, depending on the size and scope of the business, its industry, its location, and its needs and wants.
“Customer-facing industries” such as retailers are said to carry larger risks which means their insurance will cost more. The higher the risk, the higher the premium. Industries like landscaping and construction traditionally carry higher general liability costs due to working on other people’s property (they also require significant worker’s comp due to the possibility of injury).
The type of liability a business owner chooses will have a direct impact on the premium to be paid. Small businesses generally can get away with $1 million limit to what the insurance company can pay out per claim. It should also include a $2 million aggregate limit, meaning the insurer will not pay more than $2 million during the specific policy’s lifetime. The lifetime typically lasts one year before it requires renewal.
In the end, if an owner feels his or her business, large or small, needs more liability coverage to be sufficiently protected, it pays to buy more. A reputable agent will advise you on what you need and what you don’t need.
