Mar 24, 2021

Your Guide to General Liability Insurance

Have you ever had a friend or family member who decided to roll the dice in life and not purchase insurance? I’ve known several of these people, whether it was friends who skated through college with no health insurance or my particularly problematic acquaintance who refuses to buy insurance for his car (which, as you might imagine, is not registered with the state either).

Some people who avoid insurance do so with trepidation: they realize they’re taking huge risks but lack the money to pay for a policy. Others take this path gleefully, boasting about how much they’re saving by not having to make monthly payments on a policy.

Unfortunately, life has a way of catching up with those who are uninsured. And the money they saved by not making insurance payments can be instantly eclipsed by the liability brought on a catastrophe.

As a small business owner, you understand risk better than most people. You’ve followed your entrepreneurial dreams and taken on substantial liability in the process. Even if you structure your business as an LLC or other liability-friendly entity, you’ve still laid plenty on the line.

For this reason, you should strongly consider a general liability policy. This is an elective form of insurance—but that doesn’t make it any less important.

“If a third party (a customer, client, or business partner) suffers an injury or damages on your business property or as a result of your product or services, general liability insurance would protect your business and cover your legal expenses,” says a business insurance analysis from David Galic. “If you run a small business where accidents are common, like a restaurant or a construction business, you should seriously consider buying a general liability policy.”

It’s a frustrating aspect of business that you or your employees can be accused of injuring others or causing damage to them. You can hold as many safety and operational training sessions as possible, but accidents and mistakes will still occur. And you also run the risk of dealing with vindictive individuals who pursue legal action almost as an amusing pastime.

General liability insurance provides a wide-reaching shield for these various scenarios. It can easily be the difference between navigating a legal challenge successfully and having a lawsuit force you out of business.

While general liability insurance is a must-have for nearly all small businesses, there are also many other types of insurance to consider. Popular options include:

You’ll certainly never need all the different types of small business insurance on the market. Begin with general liability insurance and then look for any other policies that are either required for your business or make financial sense in the long run.

“In some instances, you might be legally required to purchase certain types of business insurance,” says the Small Business Administration. “The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance. Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.”

Consult an insurance expert who can help you to identify the best policies for your business and avoid redundant or unnecessary options. Insurance agents are paid based on the policies you buy, so you should only work with those you can trust to give the most accurate and unselfish information. You can learn about insurance agents through online reviews, but the best way to find someone trustworthy is to ask for referrals from other business owners in your network.

With the help of your agent, you’ll be able to compare options and find the policy that offers the right price and terms. It’s unlikely that the first policy you consider will be the optimal choice, so don’t give up the hunt too soon. You’ll likely need to put some effort into the process if you want to reach the best outcome.

Even after you’ve secured the ideal insurance policies for your small business, you’ll need to reevaluate them on a regular basis. For example, if your business has a strong year and grows substantially, you should consider new insurance prospects that might be needed for your larger operations.

What’s important: shopping around for the best deals and making sure that your investments are safely guarded. When done right, insurance can become the security your business needs in order to thrive.


The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney to obtain advice with respect to any particular legal matter.

About the author

Grant Olsen
Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.


Bookkeeping for your small business.

Simplify your bookkeeping and save money