Do I Need General Liability Insurance for My Business?

If you’re running or starting a business, you might be wondering, “Do I really need general liability insurance?” As in, is general liability insurance required by law — or just a good idea to have?

While it’s not always legally mandated depending on which state you’re in, general liability insurance is often essential for protecting your business from financial losses from third-party claims (as in: your clients, office visitors, etc.). Often called “slip-and-fall insurance,” GL is a type of business insurance that safeguards your company from lawsuits over bodily injury, property damage, or personal and advertising injury.

In this article, we’ll help you understand:

• Whether your business needs GL insurance
• What situations typically require GL coverage
• How much coverage your business might need
• What you’ll need to apply for a policy

Is General Liability Insurance Required by Law?

General liability insurance isn’t typically required by state or federal law. However, many businesses still need this coverage because it’s often required by:

• Commercial landlords who want proof of coverage before leasing space
• Business clients who require it in their contracts
• Licensing boards for certain professions
• Government contracts and bids
• Industry standards and best practices

For example, if you want to lease office space, your landlord will likely require you to carry general liability insurance before signing a lease. Similarly, many clients, especially larger companies or government agencies, require proof of GL coverage before they’ll work with you.

Even when it’s not explicitly required, general liability insurance provides important protection. It helps safeguard your business from financial losses due to common claims like:

• A customer getting injured on your property
• Your employee accidentally damaging a client’s property
• Advertising injuries or copyright claims
• Legal defense costs for covered claims

Without this coverage, your business would be responsible for paying these costs out of pocket, which could be financially devastating.

When Do I Need General Liability Insurance for My Business?

While general liability insurance isn’t legally required all the time, your business likely needs it if you:

• Own or rent a physical location
• Have clients visit your workplace
• Provide services at client locations
• Sign contracts requiring GL coverage
• Advertise your business
• Handle client property

Let’s look at some common scenarios where general liability insurance may be crucial:

Physical location

If you have an office, a store, or a workspace where third parties such as clients or vendors visit, GL insurance can help protect you if someone gets injured on your property. For example, if a client trips on your office stairs and breaks an arm, your policy would typically cover their medical expenses.

Client property

When working at client locations or handling clients’ property, accidents can happen. If, for instance, your employee accidentally damages a computer while working at a client’s office, GL insurance would help cover repair or replacement costs.

Advertising activities

Even careful businesses can face advertising injury claims. If your company is accused of copying another company’s marketing content or making misleading claims, GL insurance could help cover legal defense and settlement costs.

Contract requirements

Many clients and landlords require GL coverage before doing business with you. Having this insurance demonstrates that you’re a responsible business partner who can handle potential claims.

How Much General Liability Insurance Do I Need?

When buying general liability insurance, you will be asked what limits of liability you want. This is the amount of money you have available for judgments, settlements, and other costs you may need to pay.

Limits of liability will be offered to you as a per claim amount and a per policy period amount. For example, if you choose a $1M/$2M GL policy, you’d have $1 million per claim, and $2 million per policy year. But you will have choices of paying more for higher limits or paying less for lower limits. In order to make a decision, you’ll want to consider:

• Your industry’s typical risks. You probably know if you work in a litigious industry or state, or if your line of work lends itself to more accidents than others.
• Client contract requirements. Many freelancers and consultants have GL and errors & omissions insurance requirements in their contracts.
• The value of client property you work with. Working with high-net-worth individuals, homes, or property? Consider factoring in the cost of damaging the most expensive item you’ve worked with.
• Your business’s growth plans. Plan to add employees or another office this year? It’s recommended that you factor that plan into your decision.
• Landlord requirements. Some rental agreements require you to carry a certain amount of GL insurance.

Remember that as important as GL insurance is, it doesn’t cover everything. For example, general liability insurance doesn’t typically cover damages to your own property, professional errors or negligence, employee injuries, automobile accidents, or business disputes. Some of these events are covered by professional liability insurance or other types of coverage.

What Does My Business Need to Apply for General Liability Insurance?

When applying for general liability insurance, you’ll need to provide some basic information about your business to get an accurate quote. Depending on the state you do business in, you don’t necessarily need a business license, but you will need to provide basic information about your business.

Business information

Here’s the info you need to have handy about your business for your GL application:

• Legal business name
• Business structure (LLC, corporation, sole proprietorship, etc.)
• Federal tax ID number
• Physical business address
• Years in business
• Number of employees

Operations details

You’ll need to share specifics about your gross revenue, services, and past insurance experiences – including past claims. Have this info ready:

• Annual revenue or projected revenue
• Detailed description of business activities
• Types of services or products you provide
• Information about your business property
• Previous insurance history

You’ll also need to provide information about any previous claims or incidents that could lead to claims. Being honest and thorough during the application process helps ensure you get the right coverage for your business needs.

Keep in mind that some industries or states might require additional documentation, such as professional licenses or certifications, to complete the application process.

Get Affordable General Liability Coverage from Berxi

A GL policy at Berxi can start at $100, but most professionals with offices can expect to pay between about $350 and $550 per year, or between $30 and $46 per month. But when choosing a general liability insurance provider, it’s important to consider cost as well as coverage and company strength. Berxi offers distinct advantages for businesses seeking reliable GL coverage.

Buying direct from Berxi can save you an average of 15% on your general liability insurance plan. Berxi is part of Berkshire Hathaway Specialty Insurance Company (BHSIC). A policy from Berxi comes with the knowledge that you’re supported by a company that has the highest possible financial strength rating of A++ from AM Best and AA+ from Standard & Poor’s.

With Berxi, you’ll get:

• Competitive rates through direct-to-you coverage
• The financial backing of an A++ rated insurer
• Quick, easy online quotes and policy management
• Customer service rated 4.87 out of 5 stars by 13,000 customers
• Expert claims support when you need it most

Ready to protect your business with the right coverage? Berxi is rolling out GL insurance state by state throughout 2025. Check whether Berxi offers general liability insurance in your state and see how much you could save by buying direct from Berxi.

 

Image courtesy of iStock.com/Group4 Studio

Image courtesy of iStock.com/Jelena Danilovic

More:

• Small Business
• Insurance EDU

The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer