General liability, professional liability, product liability—understanding what each covers and where the gaps are.
Liability insurance protects your business when someone claims that your business caused them harm—bodily injury, property damage, or financial loss. Without it, a single claim can wipe out a small business. Understanding the main types helps you identify where you are protected and where you are exposed.
General liability insurance (often called GL or a 'slip-and-fall' policy) covers claims of bodily injury and property damage caused by your business operations. If a customer slips in your store, or your work damages a client's property, GL typically covers the legal costs and any settlement or judgment up to the policy limit. Most small businesses that interact with the public, work on client premises, or have a physical location should carry GL.
Professional liability insurance (also called errors and omissions, or E&O) covers claims that your professional advice or services caused a client financial harm. If a client alleges that your tax preparation error cost them money, or that your consulting advice led to a loss, E&O responds. It is essential for service providers whose work involves expertise and recommendations—accountants, consultants, insurance agents, and similar professionals.
Product liability insurance covers claims arising from products you manufacture or sell. If a product you made injures someone, this coverage responds. Businesses that resell products may be partially covered by the manufacturer's policy, but businesses that manufacture or rebrand products should carry their own.
Workers' compensation insurance is required in most states once you have employees. It covers medical costs and lost wages for employees injured on the job, and it protects the business from being sued directly for workplace injuries. The requirements and thresholds vary by state.
The right combination depends on your industry, your operations, and your contracts. Many clients and landlords now require proof of coverage before they will work with you, and a certificate of insurance is the standard way to demonstrate it. If you are unsure what you need, a consultation can help you assess your exposure and review available options.
Insurance products and availability vary by state, carrier, underwriting, and licensing. Coverage is not effective until approved and issued by the carrier. This article is general educational information, not a recommendation to purchase any specific product.
This article is general educational information and is not legal, accounting, tax, or investment advice. Rules, limits, and thresholds change. Insurance products and availability vary by state, carrier, underwriting, and licensing. Coverage is not effective until approved and issued by the carrier. Consult our office for guidance specific to your situation.