Business Liability Insurance is a policy that protects a company from financial losses resulting from legal claims or lawsuits filed by third parties for injury, property damage, or other liabilities arising in the course of business operations.
Starts at $0 + state fees and only takes 5-10 minutes
Last Updated: January 22, 2026
Learn the definition of business liability insurance and why it may be a necessity to protect a company.
Business liability insurance is an insurance policy that protects a company against claims for:
It may also cover damages caused to a landlord’s property.
These policies also cover the cost of a lawsuit, including:
Business liability insurance is an essential form of protection for a business.
Business liability insurance is also called general liability insurance because it covers general claims against a business.
The typical policy will often cover the following damages:
Business liability insurance is extra important if a company welcomes visitors or serves clients in their homes.
What are business liability insurance’s main benefits? There are many. A small business owner or sole proprietor may lose their business and personal property if forced to defend themselves in an expensive lawsuit. One of the advantages of business liability insurance is that it offers protection to this kind of legal entity.
Commercial property owners may also require a company to provide a certificate of liability insurance before it can sign a lease. Clients may expect an entrepreneur to carry business liability insurance, meaning they will not enter into a contract with their business until they show proof of coverage.
Certain professional associations or state laws may require businesses to carry specific types of liability insurance in addition to (or instead of) general liability insurance. The average entrepreneur may need one or more of these policies to protect themselves and their business, though it’s prudent to ask for exclusions if the policies overlap.
Wise business owners will take time to read the fine print and talk to an insurance professional to help ensure they get the right coverage for their business.
There are few downsides to having the peace of mind offered by business liability insurance. The big one? It can be expensive. Prices vary based on factors such as:
In other words, the insurance premiums for an amusement park in New York City would be a lot higher than those of a bakery in Des Moines.
If money is tight, there may be ways to reduce insurance costs. For example, a business owner policy (sometimes called a BOP) combines general liability and property insurance at a lower premium.
Most business liability insurance policies contain coverage limits for each occurrence and in the aggregate (the total amount the policy will pay within a policy period). It’s important to look at these amounts when determining whether the policy provides the coverage the business needs.
A business liability insurance policy helps cover the cost of bodily injury, property damage, personal injury, and advertising injury claims and lawsuits.
Recommended articles
Small Business Business Insurance Guide
Types Of Business Insurance That a Startup Business Might Need
Even good business liability insurance may not protect all of a small business owner’s personal assets if they have a sole proprietorship and get sued. With services starting at $49, ZenBusiness can help entrepreneurs protect themselves by setting up a limited liability company or corporation today with their Business Formation Services.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
Ready to Start Your Business?
Scan to download
the ZenBusiness app
