A business owner sees the words “general liability” on an insurance policy and assumes it covers almost any lawsuit filed against the company.
That is understandable because the name sounds broad.
But general liability is designed for particular types of claims. Knowing those categories makes it much easier to understand when the policy may respond and when you probably need another kind of insurance.
Commercial general liability insurance generally covers certain claims made against your business by customers, visitors, vendors, property owners, and other third parties. Those claims commonly involve bodily injury, damage to someone else’s property, or specific personal and advertising offenses.
The policy may also pay certain medical expenses and provide a legal defense when a covered lawsuit is filed. That does not mean every accident, loss, or lawsuit is covered.
Coverage A: Bodily Injury and Property Damage Liability
The largest section of most general liability policies is Coverage A: Bodily Injury and Property Damage Liability.
Bodily injury means physical injury, sickness, or disease suffered by another person.
The familiar example is a customer slipping inside a store. But Coverage A can also apply when an employee accidentally injures someone while making a delivery, performing repairs, or working at a customer’s location.
Property damage means physical damage to tangible property belonging to someone else, along with certain resulting loss of use.
For example:
- An employee might damage a customer’s flooring while moving equipment.
- A landscaping company might break a window while mowing.
- A repair company might accidentally cause water damage while servicing a piece of equipment.
Coverage A can also apply after a product has been sold or after work has been completed.
Products liability addresses certain injuries or property damage caused by something your business manufactured, distributed, or sold. Completed-operations liability addresses certain claims that arise after your work has been finished and put to its intended use.
Coverage B: Personal and Advertising Injury Liability
The next section is Coverage B: Personal and Advertising Injury Liability.
Despite the name, this is not coverage for physical injuries. It applies to specific offenses listed in the policy.
Depending on the allegations and policy language, that can include claims involving libel, slander, wrongful eviction, false arrest, or certain advertising-related infringements.
Coverage B is not broad protection for every marketing disagreement or intellectual-property claim. The allegation has to fit a covered offense, and exclusions can still apply.
Coverage C: Medical Payments
Coverage C is Medical Payments.
This section may pay limited medical expenses for certain people injured because of an accident at your premises or arising from your operations.
Unlike Coverage A, it may respond without first requiring a finding that your business was legally liable.
Defense of a Covered Lawsuit
General liability may also include another valuable feature: the defense of a covered lawsuit.
Subject to the policy language, the insurer may hire an attorney, investigate the allegations, and pay other defense-related expenses. That defense obligation can matter even when the business believes it did nothing wrong.
An Oklahoma Completed-Operations Example
Suppose an Oklahoma plumbing company finishes replacing a water line inside a customer’s office.
Two days later, a connection fails. Water damages the customer’s flooring, drywall, and office furniture.
Because the work had already been completed, this is the type of third-party property-damage claim that may fall under the completed-operations portion of Coverage A.
The insurer may investigate the claim, defend the plumbing company if it is sued, and pay covered damages. The actual result would still depend on the policy, its endorsements, and the facts of the loss.
Common General Liability Misunderstandings
The most common mistake is assuming general liability covers damage to everything.
It usually does not insure your own building, tools, inventory, or equipment. Those exposures normally belong under property or inland marine coverage.
Another mistake is assuming every claim made against the business is automatically covered.
Commercial auto accidents, employee injuries, professional mistakes, cyber incidents, and employment disputes often require different policies.
Key Takeaway
The simplest way to think about general liability is that it addresses certain claims made against your business by other people or organizations. It can respond when your business is accused of causing an injury, damaging someone else’s property, or committing one of the specific personal or advertising offenses covered by the policy.