A customer trips on a loose floor mat at your restaurant. A contractor accidentally breaks a client's expensive equipment. A product you sold causes someone an injury. In any of these scenarios, a general liability lawsuit could easily run $75,000–$500,000 by the time legal fees, settlements, and damages are tallied. General liability insurance exists for exactly this moment.
What general liability insurance actually covers
General liability (GL) covers three main categories of claims:
- Bodily injury — someone is physically hurt because of your business operations. A customer slips and falls. A visitor is injured at your worksite. A passerby is hurt by your equipment.
- Property damage — your business (or an employee) accidentally damages someone else's property. A contractor knocks over a homeowner's antique. A cleaning crew breaks a client's laptop.
- Personal and advertising injury — claims of libel, slander, copyright infringement in your advertising, or false advertising. More common than people think in the digital age.
When a covered claim happens, GL pays for legal defense costs (even if the claim is frivolous), settlements, and court-awarded judgments — up to your policy limits.
Who needs it
Virtually every California business that has customers, clients, or employees — or operates from a physical location — needs general liability. Specifically:
- Retail stores, restaurants, cafes, and food service
- Contractors, tradespeople, and construction companies
- Salons, spas, gyms, and personal service businesses
- Consultants, agencies, freelancers, and service providers
- Landlords and property owners
- Event businesses, caterers, and vendors
Many clients and landlords now require a certificate of insurance (COI) before signing a contract or lease. If you can't produce one, you lose the job.
How much coverage do you need?
The two numbers that matter on a GL policy are:
- Per-occurrence limit — the maximum payout for any single claim (most common: $1M)
- Aggregate limit — the total payout for all claims in a policy year (most common: $2M)
$1M/$2M is the standard starting point for most small businesses. Higher-risk operations (construction, manufacturing, anything with significant public exposure) often need $2M/$4M or an umbrella policy on top.
Pro tip: A commercial umbrella policy adds $1M–$5M of coverage on top of your underlying GL for a surprisingly low cost — often $300–$600/year. If you have contracts requiring $2M or higher limits, an umbrella is the cost-effective way to get there.
What does it cost in California?
GL premiums depend on your industry, revenue, number of employees, and claims history. General ranges:
- Consultants / low-risk service businesses: $400–$800/year
- Retail / restaurants: $800–$2,500/year
- Contractors / trades: $1,500–$5,000+/year depending on scope
- Construction / high-risk: $3,000–$15,000+/year
What GL doesn't cover — the gaps that bite people
- Your own property — GL covers damage to others' property, not yours. You need commercial property insurance for that.
- Employee injuries — that's workers' comp territory.
- Professional errors — if your advice or service causes a client financial loss, GL doesn't cover it. You need professional liability / E&O.
- Auto accidents — if you or an employee has an accident while driving for business, GL won't respond. Commercial auto is separate.
- Cyber breaches — data breaches require cyber liability coverage.
- Intentional acts — GL only covers accidents. If you deliberately harm someone, there's no coverage.
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