Handbook / Business insurance

General liability insurance for a one-person business, explained

If you work in other people's homes, run workshops, sell products, or meet clients in person, the most common question about insurance is whether you need general liability coverage. The answer depends on your work and your contracts, but understanding what the policy is designed to do makes the decision much easier. This guide uses SBA's descriptions and avoids premium figures, because those depend entirely on your situation.

What it is designed to cover

SBA describes general liability insurance as suitable for any business, protecting against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.

In practice, think of it as coverage for accidents involving other people or their property:

• A client trips over your equipment in their hallway and is injured.
• You knock over and break a client's lamp while working.
• Someone claims a statement you published damaged their reputation.

The defence costs part matters. Even a claim that fails can be expensive to answer, and liability policies commonly include the cost of defending a covered claim. Check how your policy treats defence costs against the limit.

What it usually leaves out

General liability is not a catch-all. Common gaps:

• Professional mistakes. SBA describes professional liability insurance, sometimes called errors and omissions, as covering loss from malpractice, errors and negligence for businesses that provide services. If a bookkeeping error costs a client money, that is typically a professional liability matter.
• Your own property. Damage to your equipment is commercial property or equipment insurance territory.
• Products. SBA lists product liability separately for businesses that make, distribute or sell products.
• Vehicles. Driving for work typically falls under auto policies, and personal auto policies may exclude business use.
• Your own injuries. General liability covers other people, not you.

The exact list depends on the policy's definitions and exclusions. Ask for the specimen wording before you buy.

Who tends to need it

Think about where your work happens and who could be hurt:

• Work on site. Cleaning, repairs, organizing, pet care in homes, event setup.
• People on your premises. Lessons or workshops you host.
• Public-facing work. Market stalls, pop-ups, events.
• Contract requirements. Many commercial clients, property managers and venues require a certificate showing a minimum limit before you start.

A copywriter who never meets clients in person may decide professional liability matters more. A dog walker meeting clients at their doors may want both.

Limits, deductibles and the declarations page

When comparing quotes, look past the premium:

• Per-occurrence limit. The most the insurer pays for one incident.
• Aggregate limit. The most it pays in the policy period across all incidents.
• Deductible. What you pay before coverage applies, if any.
• Additional insured. Some clients want to be named on your policy for work you do for them. Ask whether that is available and whether it costs extra.
• Territory and activities. Make sure the described activities match what you actually do. Coverage can be denied if the work falls outside the description.

The declarations page summarises these. Keep it where you can find it quickly.

How it fits with other policies

SBA lists several common types of business insurance: general liability, product liability, professional liability, commercial property, home-based business insurance, and a business owner's policy that bundles common coverages. For a one-person business, the usual decision is between a standalone general liability policy, a bundled policy, or a rider on home insurance.

SBA also notes a general rule: insure against things you would not be able to pay for on your own. That is a useful filter. A broken lamp you can pay for yourself; an injury claim you probably cannot.

Questions to ask before buying

1. Does this policy cover the exact activities I described, in the places I work?
2. What are the main exclusions for my type of work?
3. Are defence costs inside or outside the limit?
4. Can you issue certificates and add clients as additional insureds?
5. Does my home or auto insurance exclude business use?

Ask for the answers in writing and keep them with the policy.

Keeping it working

Review the policy each year and whenever your activities change. Adding a new service can fall outside the described operations. The right policy is the one that matches what you actually do, in writing, before the day you need it.