800.900.8657
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General Liability FAQs

What is Liability?

A liability is an obligation for something. With regard to business insurance, a liability legally binds an individual or company to settle a debt. In the U.S., business owners have a legal liability, a product liability, and a public liability automatically imposed on them via state and federal common laws.

Legal liability requires businesses to pay debts they are legally liable for paying. Product liability holds businesses accountable for their products or completed operations. And public liability protects the general public from negligence or damages caused to others.

Why Do I Need General Liability Insurance?

General liability insurance is designed to a business from certain risks. These risks can include anything from property damage, injury to others, or personal injury such as libel and slander.

When it comes to business, the kinds of insurance risks can be more significant and more costly. As a business, you are responsible for what happens to your employees and property, as well as the people your business does business with.

General liability insurance covers these risks and protects your company from possible financial claims and losses.

What Does General Liability Insurance Cover?

General liability insurance covers third-parties from injuries and damages to their property. It will also cover personal injuries caused by advertising, slander. or libel.

General liability insurance does not cover professional advice (see professional liability), autos, employee related injuries or liabilities, and damage to the businesses own property.

How Much is Business Insurance?

The cost of business insurance coverage can vary significantly from one business to the next. Liability coverage costs can vary from a few hundred dollars to thousands of dollars a year for a policy. Some of the factors affecting the cost of business insurance include:

Business Type and Risk
Every Business has a unique liability classification for their business. These classes are used to determine the typical risks and exposures associated with the business, and are the basis for establishing the insurance rating factor that will be applied to some or all of: gross sales, gross payroll, subcontractor expenses, and square footage of operations.

Business Location and State
The state and physical location of a business is also a factor in determining how much a business insurance policy will cost. State laws and regulations have a significant affect on insurance costs as well as

Gross Sales
Gross sales is an important factor in rating coverage because greater sales generally means greater risk for a claim, For many business liability policies, gross sales is divided by $1,000 and multiplied by the insurance carrier’s rate to determine the price of a policy.

Annual Payroll
For other types of businesses, such as contractors and construction companies, gross payroll may be used as the rate multiplier for coverage instead of sales. Payroll often represents a better measure of exposure for many contractor related companies.

Square Footage of Property
The square footage of a building, or the parts accessible to the public, often represents insurance company risk because it signifies how many customers can be served at once and/or on the premises at the same time. Square footage rating is often used for rating may medical service-related businesses.

Sub-Contractor Exposure
Insurance companies generally have concern with regard to sub-contractor exposures. The potential for a claim falling back on your insurance company is significant. Many small business owners don’t always know if their sub-contractor or 1099’s have their own insurance coverage.

Other Factors Influencing the Cost of Business Insurance
Liability insurance companies are private enterprises that operate under the same laws of supply and demand as most other businesses. Their profitability within a given state or class of business plays a large role in the cost of coverage.

What Kind of Insurance Do I Need for My Business?

While every business needs general liability insurance, business owners don’t always need the same additional lines of coverage. The specifics of your business, the nature of you operation, your assets, tools and equipment, vehicles, customer data, and employees are important factors to consider when determining what insurance is needed for a business.


A good insurance agent that specializes in small business insurance can help owners navigate through the various coverage options available.


In some instances, it may actually be better for a business owner to self-insure some things depending on their risks. Inland marine coverage for tools and equipment is a good example because many business owners feel like damage or tool theft is unlikely and

How to Shop for Insurance?

Shopping for business insurance can be a huge task. Not only does coverage quality and price vary significantly by insurance company, but liability insurance options can be confusing and complex.

The best way to shop for insurance is to get quotes and compare rates and coverage from 5 or more insurance companies. Getting multiple quotes helps business owners make a better choices on their coverages and ensures their getting a good deal.

General Liability Shop.com works with more than 35 insurance companies to help you shop business liability insurance. Our Specialists work exclusively for our agency and are well-versed in all lines of business insurance. We love helping business owners shop insurance.


Call a Specialist Today | 800-900-8657


How is General Liability Insurance Calculated?

Insurance companies calculate general liability insurance rates differently depending on the class of business. One of three factors are used:

1. Gross Sales
2. Gross Payroll
3. Square Footage

A rate, or percentage, is determined by each insurance company based on factors including the businesses SIC classification, their location, and the limits of coverage. For example, if the rate assigned is $5.00 per $1,000 of gross sales, you would divide the gross sales by $1,000 and then multiply that number by the rate. If the rate was $10.00 per square foot, you would multiply the square footage of your space by the rate.

Gross sales is the most common rating factor for most businesses such as retail and manufacturing. However some businesses, such as attorneys and medical offices will often be rated using square footage of office space. Contractors are often rated using gross payroll and sub-contractor exposures.

Can I Get Any Discounts for Business Liability Insurance Coverage?

The best answer is yes. Most insurance companies offering business liability and property coverage offer underwriting credits for almost every type of policy available. These credits can often help business owners save 10% – 20% off their annual insurance premiums. Common credits for commercial liability coverage include:

1. Multi-line credits- Bundling your policy with a commercial insurance package or BOP reduces the rate charged per line.
2. Associations- Many carriers offer credits to members of various professional associations such as California Restaurant Association.
3. Management Experience- Business owners who have a lot of experience in their industry may be eligible for policy credits and discounts.
4. Liability Claims- Business owners who have not claims over a sustained period of time can receive policy credits.
5. Equipment- Property and auto polices may receive credits for safety features like alarms, security cameras and safety inspections.

Insurance companies often own several sub-carriers under their corporate structure. This allows them to file multiple rates within each state and enables them to utilize different rating factors for the same types of businesses. Agencies, like General Liability Shop.com, who don’t rely solely on online rating systems to generate quotes, are also in a position to negotiate with insurance underwriters on behalf of a business. This strategy often facilitates more competitive pricing because we are able to position insurance companies to compete for the business by offering more policy credits or premium discounts.

What is Third Party Liability?

Third-party liability is a common law doctrine that requires individuals and business entities to make others (3rd parties) whole in the event they cause damage or injuries to other people or property.

Most forms of insurance are specifically designed to be third-party coverage in that they only respond to these types of claims and scenarios. Third-party liability insurance covers bodily injury, property damage, and personal injury for businesses at fault for the damage or injury.

How Long Does it Take to Get a Quote?

General Liability Shop.com works with over 35 insurance companies throughout the U.S. We have exclusive arrangements and dedicated underwriters with most of our insurance partners. Our technology and experience enables us to get your business quotes fast regardless of whether you call, have us call you, start your quote online, or get an instant online quote.


In most cases, we are able to shop your coverage and turn quotes around in less than 24 hours.


In some instances, underwriters may need more information about a business, or approval from senior underwriters, in order to release a quote. Because we are laser-focuses on getting you the very best deal, it’s often worth the wait.

What is a Liability Insurance Certificate?

An insurance certificate is a one page document issued by an insurance company or agency that serves as proof of insurance coverage for your business.

A certificate of insurance is a common document issued for business owners. It is typically issued to a third-party, and will often name the third-party as additionally insured for work done on their behalf. A certificate serves as a summary of all active coverage and is much easier than wading through various policies to validate coverages.

A certificate of insurance (Cert) should list all lines of coverages for your business along with the amount of coverage, or limits of insurance. Some certificates may include special language with the certificate to further protect the individual or company requesting the certificate.

The most common requests for insurance certificates are for contractors and sub-contractors. General contractors, individuals, and business owners often require certificates of insurance to ensure that anyone doing work for them, or on their property, has adequate coverage in place.

Cert’s are important to protect your business. If a contractor or 1099 worker is doing work for another business without coverage, that business may be legally and financially liable for any accidents or injuries.

What is Professional Liability Insurance?

Professional liability differs from general liability in that in pertains to negligence associated with professional services rendered. The damage is usually financial rather than physical injury.

An accountant could have a professional liability claim for damages for giving poor advice to a client. A technology consultant could cause financial damage by writing a billing program that does not perform as promised.

What is Business Personal Property?

Business personal property is also know as contents coverage. It includes the furniture and fixtures, machinery and equipment, stock, and other personal property owned by the insured that is used in the business.

How much business personal property coverage do you need?
You need to calculate the cost or replacing all your business personal property such as furniture, fixtures, inventory, telephone system, fax machine. etc.) also the replacement value of all the tenant improvements & betterments you have built into your leased premises. You should buy coverage for the amount of money it would take to replace the property.

What is EPLI Insurance?

EPLI insurance is an acronym for Employment Practices Liability Insurance. This professional liability insurance product is relatively new in the business world and gained importance because of the numerous laws enacted to protect employees from wrongful termination, discrimination, harassment, distress, invasion of privacy, and breach of contract.

Both the federal government and most states have laws designed to ensure employee rights are protected and to govern each employers’ liability for their employees. EPLI Insurance coverage is a policy that responds to employee related claims against the employer for a wide range of reasons. Most polices also cover the cost of defending the employer and business against alleged violations and claims.

EPLI insurance is almost always written on a claims made basis. This means coverage is only applicable if a policy was in affect during the time of the claim and the incident also happened during the same period.

What is Product Liability?

Product liability is designed to protect business customers and the general public from injuries caused by a product, or a completed operation such as a deck or a renovation. These laws affect manufacturers, suppliers, distributors, retailers, contractors, and any other business that makes a product available to the public.

A product liability claim can include a design defect, a manufacturing defect, a marketing defect. Marketing defects are the most common type of claims against business owners because a business may be held liable for damages if it failed to warn consumers about the product.

When Should I Report a General Liability Claim?

It’s not uncommon for a Business owner to be threatened with an insurance claim. Sometimes, business owners don’t always know if the threat is valid or even legitimate.


It’s not always a good idea to report every potential claim to the carrier, but you need to understand the risks.


If you feel like someone will be seeking reimbursement from you for medical expenses or damaged property, you should contact your agent or submit your claim directly to the insurance company- Even if you believe that you are responsible for these damages.

Notifying the carrier will enable them to help investigate the facts of the loss and be ready to determine the best course of action.

Excess Liability vs Umbrella Coverage?

Many business owners assume that an umbrella policy is the same type of coverage as an excess liability policy. Both policies are used to increase the limits of liability coverage over the top of other primary polices such as general liability and commercial auto. However, their are a few key differences between each type of policy.

An umbrella policy not only adds additional layers of coverage in terms of the limits of insurance coverage, but it also adds additional coverages for the insured that were not covered by the primary polices. In other words, umbrella coverage often helps fill the gaps in coverage by offering a broader array of included protection for a business.

An excess liability policy is more restrictive than umbrella coverage because these policies only increase the limits of insurance on the primary business liability coverage. They do not offer any additional coverage features or benefits.

Ironically, an umbrella policy is often less expensive than excess liability coverage.

How Much Does Restaurant Insurance Cost?

Restaurant insurance is generally pretty affordable depending on the value of property and liquor sales. However, it’s a labor intensive business. Many restaurants have a good deal invested in personal property and equipment and many also have high labor costs. For many restaurants, the most costly insurance coverage is workers compensation due to their employee payroll.

General liability insurance is important for restaurants due to customer falls and the potential for food born illnesses. For restaurants that need liquor liability insurance, the costs and escalate quickly depending on your state laws and the percentage of alcohol sold in relation to food sales.

General liability rates for restaurants are determined based on gross sales of both food and alcohol. Liquor liability rates are determined based on alcohol sales only. So it’s important for restaurants ot have a good POS system to track sales of food, alcohol, and merchandise separately (if applicable).

Why is Liability Insurance Important in the Medical Office?

Business liability insurance is extremely important for a medical office. Both general liability and professional liability (medical malpractice) should be included with any insurance plan for doctors offices, physicians, and clinics.

A medical office has patients and other relatives on their premises at most times. Their is a moderate risk for slips, trips, and falls which is included under general liability coverage. Professional liability risks are much more extensive because their are numerous malpractice risks associated with treatment, advice, negligence, and the spread of disease.