General liability insurance

What triggers it

The claim has to come from someone outside the business, and it has to involve physical harm — an injury to a person, or damage to property belonging to someone else.

The classic cases are a customer injured on your premises and damage you cause while working at someone else's. It also commonly extends to personal and advertising injury, which covers a narrow set of claims such as libel, slander or infringing someone's advertising idea.

Products and completed operations is the part that continues after the work is finished — a claim arising from something you made or a job you completed, arriving long after you left.

Defence costs, and where they sit

Defending a claim can be expensive even when the claim fails, and the defence is usually covered.

What varies is whether defence costs sit inside the limit or outside it. Where they sit inside, money spent defending reduces what is left to settle with, which matters most in exactly the long, contested claims where defence is expensive.

It is worth asking which arrangement applies. It rarely appears in a summary and it materially changes what a limit is worth.

Occurrence, and why that matters

General liability is normally written on an occurrence basis: if the incident happened while the policy was in force, it generally responds even if the claim arrives years later, after that policy has ended.

That is the opposite of how professional liability usually works, and the difference is the single most consequential thing to understand about commercial liability cover.

It means a business that held general liability during a job retains cover for that job, which is why products and completed operations cover has real value long after the work.

Two limits, not one

Policies carry a per-occurrence limit and an aggregate limit. The first caps any single claim; the second caps everything paid in the policy period.

So a bad year can exhaust the aggregate and leave the per-occurrence limit theoretically intact but nothing behind it. The aggregate is the number that matters after the first claim.

Some policies apply the aggregate per project or per location, which is worth asking about where a business runs several sites or several large jobs at once.

What it does not cover

• Professional mistakes and bad advice — that is professional liability
• Injuries to your own employees — that is workers' compensation
• Damage to your own property — that is commercial property
• Most vehicle-related liability — that is commercial auto
• Your own faulty workmanship, as distinct from damage it causes to something else
• Employment disputes, which sit under employment practices liability