That's the short answer. The longer answer is worth your time, because general liability is the most common — and most poorly understood — commercial policy in small business. Most owners buy it because a contract requires it, then never look at it again until a claim happens.

What general liability insurance covers

A standard general liability policy (sometimes called Commercial General Liability, or CGL) typically protects your business in four main areas:

1. Bodily injury to others

If a customer, vendor, or member of the public is physically injured because of your business — slipping on a wet floor, getting hit by something falling on a job site, being injured by a piece of equipment you brought onto a property — general liability covers their medical costs, lost wages, and any legal expenses if you're sued.

2. Property damage to others

If your business damages someone else's property — a contractor breaks a pipe, a cleaning crew knocks over a piece of art, an HVAC tech's work causes water damage — general liability covers the cost of repair or replacement, plus any legal defense.

3. Personal and advertising injury

This covers non-physical harm caused by your business: libel, slander, copyright infringement in your advertising, false arrest, wrongful eviction. It's the section of the policy most owners forget exists, but it's the part that protects you against claims you wouldn't see coming.

4. Completed operations

Sometimes called products-completed operations coverage, this protects you when something you finished causes a claim later. A contractor finishes a roof in March; a year later, a leak causes interior damage. Completed operations coverage responds to that claim, even though the work itself was done long before.

What general liability insurance doesn't cover

Just as important as knowing what GL covers is knowing what it doesn't. The most common gaps:

• Injuries to your own employees. That's workers' compensation, a separate policy. GL specifically excludes employee injuries because they belong to the workers' comp system.
• Damage to your own property. If your tools, equipment, inventory, or building are damaged, you need a commercial property policy or an inland marine endorsement.
• Damage to the work itself. If you build something and it has a defect, the cost to repair the defective work is generally not covered by GL. That requires separate coverage like contractor's errors and omissions, or a specific endorsement.
• Vehicle-related claims. If a vehicle is involved, commercial auto insurance applies — not GL.
• Professional advice or service errors. Mistakes in professional advice (architectural design, legal counsel, accounting) require professional liability insurance, sometimes called errors and omissions (E&O).
• Pollution and environmental damage. Most GL policies exclude pollution claims. Industries that work with chemicals, fuels, or environmental risks usually need a separate pollution liability policy.
• Cyber claims. Data breaches, ransomware, and digital privacy issues are excluded from standard GL and require cyber liability insurance.

GL is broad, but it isn't universal. Most small business risk needs three or four policies working together — not one policy doing everything.

Why your "$1 million policy" might not actually pay $1 million

General liability policies have a headline coverage limit — the most the policy will pay for any single occurrence and in total per policy term. The most common structure for small business is $1 million per occurrence and $2 million aggregate, often written as "$1M / $2M."

What most owners don't realize is that inside the headline limit, there are sub-limits — smaller caps that apply to specific kinds of claims. Common sub-limits include:

• Damage to property in your "care, custody, or control" (often capped at $5,000 to $50,000)
• Personal property damage (often capped well below the headline limit)
• Medical payments to others (typically $5,000 to $10,000)
• Damage to premises rented to you (often capped at $100,000 to $300,000)

A cleaning crew knocks over a $4,000 vase in a client's home. The headline limit on the policy is $1 million. The sub-limit for damage to property in their care, custody, or control is $1,000. The carrier pays $1,000. The owner pays the remaining $3,000 out of pocket.

Sub-limits aren't hidden, but they're not advertised either. They live in the declarations page, in language most owners never read. Knowing what your sub-limits actually are is one of the most important things a coverage review can surface.

How much general liability insurance do you need?

The right limit depends on three things: what your contracts require, what your industry's typical claim values look like, and what kind of work you do. A few useful benchmarks:

• Most modern commercial contracts now require minimum limits of $1 million per occurrence and $2 million aggregate
• Higher-risk trades — roofing, demolition, structural work — often need $2 million per occurrence or higher
• Businesses that work in high-net-worth residential settings should consider higher sub-limits for damage to client property
• An umbrella policy can extend your GL limit (and other liability coverages) cost-effectively, often adding $1 million in coverage for a few hundred to a thousand dollars per year

Owners who haven't reviewed their limits in three or more years are often carrying coverage that was right-sized for a much smaller version of their business. As revenue grows, contract values grow, and exposure grows. The limit on the policy doesn't grow on its own.

General liability vs. a business owner's policy (BOP) — what's the difference?

A Business Owner's Policy (BOP) is a packaged policy that bundles general liability with commercial property coverage, typically at a lower cost than buying the two separately. BOPs are designed for small businesses with relatively low risk profiles — small offices, retail shops, light service businesses.

A standalone general liability policy is just GL, with no property coverage attached. It's more common for contractors, trades, and businesses whose property exposure is handled differently (for example, contractors who carry their tools and equipment under a separate inland marine policy).

Some owners end up with both — a BOP that includes GL, and a separate GL policy from a different carrier — because no one ever reviewed the structure when the second policy was added. That's a quiet form of overpayment that a coverage review tends to catch quickly.

The 3 most common general liability claims for small business

Across the policies we review, the same three claim types come up repeatedly:

1. Slip-and-fall on a worksite or premises. A customer, delivery driver, or visitor is injured because of a wet floor, an unmarked hazard, debris, or icy walkways. Medical costs and legal defense add up quickly.
2. Property damage caused by work in progress. A pipe breaks during a remodel, a roof tarp blows off and damages a vehicle, a contractor's tool damages adjacent finished work. The damage isn't to the work itself — it's to surrounding property the contractor didn't intend to touch.
3. Completed operations issues that show up later. A roof installed last year leaks during a storm; a paint job peels six months in and damages flooring; a remodel reveals a hidden defect that affects the rest of the house. These are some of the most expensive claims contractors face.

The bottom line

General liability is the backbone of commercial insurance for most small businesses, but it's not a complete solution on its own. It covers what you do to others — not what happens to you, your employees, your property, your vehicles, or your work. To know whether it's actually doing its job, you need to know your headline limit, your sub-limits, and what other policies you have working alongside it.

What to ask your agent

1. "What's my per-occurrence limit and my aggregate limit?"
2. "What sub-limits are in my policy, and what are they capped at?"
3. "What's specifically excluded — and which exclusions matter for the kind of work I actually do?"
4. "Do my current contracts require limits higher than what I'm carrying?"
5. "Am I duplicating coverage between a BOP and a standalone GL policy?"

If your agent can't answer these clearly, that's the gap to close.