General Liability Insurance Explained (Plain English)

General liability (GL) is one of the most common insurance requirements for small businesses — and one of the most misunderstood. Here's what it actually covers, what it doesn't, and how to think about limits and certificates of insurance.

General Liability, in Plain English

General liability is the coverage that helps if your business:

Causes bodily injury to someone else

Causes property damage to someone else's stuff

Gets hit with certain common lawsuits tied to normal operations (like advertising injury)

It's not glamorous. It's also one of the first things any landlord, client, or vendor will ask you to prove you have.

The Simplest Way to Think About It

If your business interacts with the public, other businesses, vendors, landlords, or job sites… you have liability exposure.

GL is the coverage that keeps that liability from turning into a personal financial event.

Real-Life Examples

A few very normal scenarios:

Someone slips in your office and breaks a wrist — GL

You're working at a client location and damage something — GL

You accidentally injure someone while doing your work — GL

You're accused of advertising injury (like using a competitor's slogan) — GL

Not every scenario is covered. But these are the kinds of situations GL is built for.

What GL Usually Does NOT Cover

This is where people get tripped up. GL is not the answer to everything.

It typically does not cover:

Your own property (that's a commercial property policy)

Your employees getting hurt (that's workers' compensation)

Professional mistakes or advice errors (that's professional liability / E&O)

Auto-related losses (that's commercial auto)

Cyber events or data breaches (that's cyber liability)

If you're reading that list thinking, "Cool, so I need more than one policy" — yes. Welcome to commercial insurance.

Limits: The Part People Ignore

Most small businesses end up with something like $1M per occurrence / $2M aggregate. That's a common starting point and satisfies most basic contract requirements.

Is that always the right amount? Not necessarily. The right limit depends on:

What you do

Where you do it

How much you have at risk

Who you work with (contracts often specify minimums)

Certificates of Insurance (COIs): The Most Common Request You'll Get

A certificate of insurance (COI) is proof that you have coverage. Landlords, vendors, and clients ask for them constantly.

Sometimes they also ask to be named as an additional insured — which extends your GL coverage to protect them if a claim arises from your work.

If that sentence made your eyes glaze over, you're normal. We handle these daily and can usually turn them around same-day.

Key Takeaways

GL covers bodily injury, property damage, and certain common liability claims caused by your business operations.

GL does NOT cover your own property, employees' injuries, professional mistakes, auto losses, or cyber events. Those require separate policies.

Standard limits are $1M per occurrence / $2M aggregate — a common starting point for most small businesses and contract requirements.

COIs (certificates of insurance) are the most common proof-of-coverage request you'll get from landlords, clients, and vendors.

GL is foundational, not comprehensive. It's the starting point of a commercial insurance program, not the whole thing.

What to Do Next

If you want a simple gut-check, send over:

What your business does (one paragraph)

Any contracts you're signing

Your current declarations page (if you have one)

I'll tell you what looks solid, what looks off, and what questions you should be asking.

Zach Nadler is a 4th-generation insurance broker at Nadler Insurance in San Carlos, CA. Get a GL gut-check →

Business Owner Basics: General Liability in Plain English