General liability insurance

General liability may pay when a claim says your business caused bodily injury or damaged someone else’s property. Think of a customer who slips in your shop, or a wall you damage at a client’s site. Policies commonly include personal and advertising injury, such as libel or slander, and may add medical payments for minor injuries regardless of fault. The California Department of Insurance describes the main parts as premises liability, products liability and completed operations. Covered claims may include defense costs, settlements and judgments, up to your limits. The carrier decides what’s covered under the policy terms.

The California Department of Insurance lists common exclusions: intentional injury, injuries to your own employees, auto accidents, pollution, liquor liability, damage to your own work, and property in your care, custody or control. Data breaches and claims over professional advice generally fall outside general liability too. Other policies usually pick those up, such as workers’ comp, commercial auto, cyber liability or professional liability. Read your policy for its exclusions.

For most businesses, state law doesn’t require it, though landlords, clients, general contractors and some permits do. The main legal exception is contractor LLCs. An LLC licensed by the Contractors State License Board (CSLB) must carry liability insurance with an aggregate limit of at least $1 million for five or fewer personnel of record, plus $100,000 for each additional person, up to $5 million. CSLB licensees also generally need a $25,000 contractor bond, and LLC licensees need an extra $100,000 employee/worker bond. Home improvement contractors must also tell customers in writing whether they carry commercial general liability insurance.

It depends on your business. The class of work comes first. Then comes the exposure the carrier rates on, which can be square footage, payroll or gross sales. Claims history, the limits and deductible you choose, work you hire out, and products or completed-work exposure all affect the premium too. CBIS can often quote more than one carrier so you can compare.

$1M/$2M usually means a $1 million limit per occurrence and a $2 million general aggregate, the most the policy pays for all covered claims in the policy period. Products and completed operations usually have their own separate aggregate. Start with what your leases and contracts require, then consider how large a claim against your business could get. If you need more than your general liability limits, a commercial umbrella may add limits on top.

Damage you accidentally cause to someone else’s property is the core of general liability, subject to the policy terms. Theft of your own tools or equipment generally isn’t a general liability claim. Commercial property or an inland marine equipment floater handles that instead. The cost to fix or redo your own faulty work is generally excluded, but damage your work causes to other property may be covered. Breach of contract claims are generally not covered.

No. General liability generally excludes workers’ comp and employer’s liability, so an injured employee goes through a workers’ comp policy, which California requires once you have an employee. General liability covers injuries to people outside your business, like customers, visitors and the public.

A certificate of insurance is a one-page summary showing a client or landlord what coverage you carry, your limits and your policy dates. It’s proof of coverage only. It doesn’t change the policy or add anyone to it. Clients often ask for one before work starts, and some also want to be named as an additional insured. If you need a certificate, call or text CBIS at (858) 283-7575 with the requester’s name and any wording they need.

An additional insured is a person or company, such as a client, general contractor or landlord, added to your policy so it may get coverage for claims arising from your work for them. An endorsement adds them, and some policies include blanket wording that covers anyone you’ve agreed in a written contract to add. Contracts often spell out the exact form or wording required, so send the insurance section of the contract with your request. Adding an additional insured can sometimes change your premium.

Your business structure doesn’t change what general liability covers. Sole proprietors and LLCs can both buy it, and the need usually comes from your work, customers and contracts more than the entity type. The legal exception is contractor LLCs licensed by the CSLB, which must carry liability insurance. The business insurance overview page covers whether an LLC protects your personal assets.