What Is General Liability Insurance?
General liability insurance covers third-party injury, property damage, and legal costs caused by your business activities. In the UK it’s sold as public liability insurance, which is the direct equivalent of the US general liability policy.
US insurance pages use ‘general liability’ as a catch-all; UK insurers use public liability insurance for the same third-party risks, with employees and professional advice split into separate policies.
This guide explains how the cover works, what the UK and US versions actually include, and how much a UK business should budget.
General liability is the US term for what UK insurers sell as public liability insurance: cover for third-party injury, property damage, and legal costs. The UK splits it into separate policies (public liability, employers’ liability, professional indemnity) where the US bundles them.
Compare public liability insurance quotes to get the UK equivalent of general liability cover for your business.
- How does general liability insurance work?
- Is general liability insurance the same in the UK and US?
- What does general liability insurance cover?
- Who needs general liability insurance?
- How much general liability insurance do I need?
- How much does general liability insurance cost?
- Frequently asked questions (FAQs)
How does general liability insurance work?
General liability insurance pays legal defence costs, compensation, and related expenses when a third party claims your business has injured them or damaged their property.
What triggers a claim
A claim starts when someone outside your business (a customer, visitor, delivery driver, or passer-by) alleges your work caused them harm or property loss. The insurer then takes over negotiation, defence, and payout.
Who pays what
You pay an annual premium and a policy excess if a claim succeeds, while your insurer covers legal fees, expert investigation, and compensation up to the limit you chose. The Association of British Insurers sets out the standard cover types UK businesses can buy alongside it.
A typical claim example
A decorator spills solvent on a client’s oak floor, and the repair bill comes to £6,400. The client issues a letter of claim, the insurer investigates, accepts liability, and settles the bill directly.
Is general liability insurance the same in the UK and US?
No, ‘general liability’ is a US packaged policy that bundles bodily injury, property damage, and advertising injury, while the UK splits the same risks across public liability, product liability, employers’ liability, and professional indemnity.
How the terminology maps
| Risk covered | US term | UK equivalent |
| Third-party injury on your premises or site | General liability | Public liability |
| Harm caused by a product you sell or install | General liability (products-completed) | Product liability |
| Staff injured or made ill by work | Workers’ compensation | Employers’ liability (legally required) |
| Advice, design, or professional error | Errors & omissions (E&O) | Professional indemnity |
| Libel or slander in advertising | General liability (advertising injury) | Media liability (separate policy) |
Why UK businesses split cover
UK law treats employer-to-employee claims very differently from public injury claims, which is why employers’ liability is a separate statutory policy under the Employers’ Liability (Compulsory Insurance) Act 1969.
Trading without it carries an HSE fine of up to £2,500 per day.
What does general liability insurance cover?
General liability cover pays out for third-party bodily injury, third-party property damage, and the legal costs of defending either type of claim, including groundless ones.
Bodily injury
A customer trips over a trailing cable in your shop and breaks a wrist. The policy covers their medical bills, lost earnings, and compensation, up to your chosen limit.
Property damage
A kitchen fitter scratches a client’s £3,800 worktop during installation. The insurer pays the repair or replacement cost rather than the fitter settling privately.
Legal defence and court costs
Even if a claim is unfounded, solicitor fees can run into tens of thousands. The policy funds the defence, negotiates settlements, and covers court costs if the dispute escalates.
What it doesn’t cover
Four exclusions sit outside a standard general liability policy:
- Employee injury or illness sits under employers’ liability insurance.
- Professional mistakes and bad advice sit under professional indemnity insurance.
- Damage to your own tools, stock, or premises sits under commercial combined or contents cover.
- Deliberate acts, contractual fines, and known circumstances are excluded across most liability policies.
Who needs general liability insurance?
Any UK business whose work brings them into contact with clients, customers, suppliers, or the public should hold public liability cover as the UK equivalent of general liability.
Trades and contractors
Builders, electricians, plumbers, decorators, and roofers operate on third-party sites by definition, which is why tradesman insurance bundles public liability with tools cover as standard.
Client-facing service businesses
Retailers, salons, cafés, therapists, and personal trainers host the public on-site. One slip, trip, or spilled hot drink can generate a five-figure claim.
Sole traders and freelancers
Self-employed people carry the risk personally because there’s no company barrier, which is why sole-trader public liability cover is usually the first policy they buy.
See our guide to public liability for sole traders for trade-by-trade pricing.
Event organisers and exhibitors
Markets, fairs, weddings, and trade shows require proof of cover before you can set up. Most organisers specify £5 million as the minimum limit and copy the certificate to the venue.
How much general liability insurance do I need?
Most UK businesses choose £1 million to £10 million of public liability cover, with £2 million the default for small businesses and £5 million the threshold for council work, events, and commercial sites.
Low-risk service businesses
Home-based consultants, personal trainers, and one-to-one therapists usually settle on £1 million cover or £2 million if they rent space.
Trades, retailers, and mobile services
Most client-facing businesses choose £2 million public liability cover as the sensible default, which satisfies the majority of contracts and venue hire agreements.
Council contracts and commercial sites
Local authorities, schools, and main contractors usually specify £5 million cover, often rising to £10 million for public-sector tenders and large events.
How much does general liability insurance cost?
UK public liability insurance costs between £60 and £300 a year for most small businesses, with the typical £2m policy running £100 to £180 depending on trade, turnover, and claims history.
Typical annual premiums by business type
| Business type | £1m cover | £2m cover | £5m cover |
| Home-based consultant / coach | £60 | £85 | £115 |
| Retailer / café / small salon | £95 | £135 | £185 |
| Mobile beautician / personal trainer | £75 | £105 | £140 |
| Electrician / plumber | £110 | £155 | £215 |
| Builder / roofer / scaffolder | £165 | £225 | £310 |
Figures are indicative annual premiums for a UK business with no claims and under £100,000 turnover. Your exact quote depends on trade, postcode, and cover extensions.
What drives the premium
- Trade risk: manual, on-site trades pay more than desk-based services
- Turnover: higher revenue pushes the premium up
- Cover limit: stepping from £2m to £5m usually adds £30 to £60
- Claims history: a paid claim in the last 3-5 years adds 20-40%
- Optional extras: product liability, tools, legal expenses
Tax treatment
Public liability premiums are an allowable business expense for self-assessment and corporation tax, so the full cost reduces your taxable profit.
How to buy it
You can compare quotes in around 10 minutes by entering your trade, turnover, and required limit. See our what is public liability insurance guide for the full buyer walkthrough, or check our cost breakdown by trade before requesting a quote.
Frequently Asked Questions (FAQs)
Yes, ‘general liability’ is the US term and UK insurers sell the equivalent cover as public liability insurance. The core protection (third-party injury, property damage, and legal costs) is the same.
No, employee injury and illness claims fall under employers’ liability insurance, which is a separate UK policy required by law for most businesses with staff.
Yes, if your work involves the public, client premises, or venue-based events. Sole traders carry personal liability, so a single claim can reach your own finances.
Yes, specialist insurers sell one-day to one-month public liability policies with £2m, £5m, or £10m limits for markets, fairs, pop-up stalls, and temporary contracts.
Yes, HMRC treats it as an allowable business expense for both self-assessment and corporation tax, so the premium reduces your taxable profits in full.
You pay the legal fees and any compensation personally. A judgment can be enforced against your business assets, your savings, or, for sole traders, your home.
Most UK policies are territorially limited to the United Kingdom by default. You can request a worldwide or EU extension if you work outside the UK.
Yes, sole traders, freelancers, partnerships, and limited companies can all buy public liability cover, and your business structure doesn’t affect eligibility.
No, it covers third-party property only. Damage to your own tools, stock, or premises is covered by commercial combined or contents insurance.
No. Unlike employers’ liability, public liability is not legally required, but councils, clients, and venue owners frequently require proof of cover before you can trade or work on-site.