What’s Covered (And Not Covered) By General Liability Insurance
Nestled at the heart of business protection, General Liability Insurance – also known as Commercial General Liability (CGL) – serves as a vital shield against everyday lawsuits. From a customer slipping in your store to an unintentional error in an advertisement, this policy steps in to pay for medical bills, legal defenses, and settlements arising from property damage, bodily injury, or personal and advertising claims.
In this blog, we’ll unpack exactly what general liability covers, highlight what it doesn’t, and guide you toward the smart add-ons no business should miss.
What Is General Liability Insurance?
General liability insurance (also called Commercial General Liability, or CGL) is a foundational business policy that protects companies against claims of bodily injury, property damage, personal injury, or advertising injury caused to third parties. It generally covers legal defense, settlements, and medical payments up to your policy limits.
While not required by law for all businesses, its presence can enhance trust, elevate credibility, and often unlock opportunities – like landing new contracts or leasing space – by demonstrating that your company is properly protected.
Insurance carriers typically defend and indemnify the policyholder when a claim is made within the coverage terms. There are two main policy types:
- Occurrence-based: Covers incidents that happen during the policy term, even if the claim arises later.
- Claims-made: Covers claims made during the policy term, regardless of when the incident occurred.
What IS Covered By General Liability Insurance
Most standard CGL policies offer the following core protections:
Bodily Injury
Covers medical expenses, lost wages, and legal defense when someone is hurt on your premises or because of your operations.
Property Damage
Covers repair or replacement costs when you or your employees damage someone else’s property during regular business activities.
Personal & Advertising Injury
Protects against claims like slander, libel, copyright infringement, or false advertising.
Medical Payments
Pays immediate medical bills for minor injuries on your property without needing to prove fault – covering visits, ambulance, and similar costs.
What’s NOT Covered By General Liability Insurance
While CGL is broad, it has critical exclusions. Here’s a breakdown:
Employee Injuries
Workers’ compensation insurance is required to cover injuries or illnesses suffered by employees on the job.
Damage to Your Own Property
Your building, equipment, inventory, or business vehicle requires commercial property or commercial auto insurance.
Professional Errors
Mistakes made in professional services (e.g., consulting, legal, medical) need an E&O (Errors & Omissions) or Professional Liability policy.
Intentional, Criminal, or Illegal Acts
Damage or injury caused intentionally, or through criminal acts, is excluded.
Contractual Liability
Most contractual obligations are excluded unless you qualify them as an “insured contract”.
Pollution & Environmental Damage
CGL typically holds an absolute pollution exclusion, so incidents like chemical or oil spills aren’t covered without a pollution liability add-on.
Liquor Liability
Claims arising from alcohol service (e.g., serving a visibly intoxicated guest) require a separate liquor liability policy .
Cyber & Data Breaches
Modern CGL doesn’t cover electronic data loss, breach incidents, or cyber extortion – cyber liability policies are needed.
Product Recall & Faulty Workmanship
Defects in your own product or work, and recall costs, aren’t covered. You may need product liability or completed operations coverage.
High-Risk or Catastrophic Events
Acts of God (earthquakes, floods, riots), aircraft, autos, or watercraft-related incidents are excluded and require special coverage.
Common Coverage Gaps & Smart Add-Ons
To fully protect your business, consider the following complementary policies:
- Business Owner’s Policy (BOP): Bundles general liability, commercial property, and business interruption; excludes auto, liquor, cyber, and professional risks.
- Umbrella/Excess Liability: Extra coverage beyond CGL limits; useful for major lawsuits.
- Worker’s Compensation: Mandatory in most states to cover employee injuries.
- Professional Liability (E&O): For mistakes or negligence in professional services.
- Cyber Liability: For data breach, regulatory fines, extortion, and recovery.
- Pollution, Auto, Liquor, Product Liability: For specific high-risk exposures.
Why Understanding Coverage And Exclusions Matters
- Avoid Financial Exposure – Misleading assumptions can leave huge gaps in coverage.
- Policy Suitability – Different industries (e.g., construction, hospitality, tech) require tailored solutions.
- Mind Legal Obligations – Clients, lenders, and regulators may demand specific policies.
- Stay Prepared in 2025 – Rising legal costs, litigation financing, and insurer exclusions are increasing premiums and pushing coverage limits.
Build A Complete Insurance Strategy
General liability insurance is a critical first line of defense, guarding against everyday claims like slip-and-falls and reputational issues. However, many real-world risks – such as employee injury, cyber breaches, defective work, or pollution – require other policies or endorsements to achieve full protection.
Understanding what’s covered – and what isn’t – empowers you to make informed decisions. Work closely with a trusted advisor to craft a comprehensive insurance portfolio suited to your business.
To safeguard your business fully, go beyond general liability. Explore complementary coverages and build a robust insurance strategy tailored to your needs – visit General Liability Insurance US to learn more today.
General Liability Insurance US was created to solve a simple but frustrating problem: business owners were spending hours trying to understand general liability insurance — comparing policies, deciphering jargon, and hoping they chose the right provider.
