How Much General Liability Coverage Is Enough?

The $1 million per occurrence / $2 million aggregate policy is so common that owners treat it as the answer. It's not an answer — it's a default. For some businesses it's plenty; for others it's dangerously thin. The right limit isn't a number you inherit, it's one you size to your actual exposure and your contracts.

Here's how to figure out what's enough for your business.

Start with what you're contractually required to carry

Before deciding what you want, find your floor. Many requirements are set by others:

• Leases commonly require at least $1M per occurrence and name the landlord as additional insured.
• Client contracts often specify minimum limits — sometimes higher than you'd choose, sometimes requiring you add them as additional insured. Why clients require proof.
• Licensing or municipal requirements in some trades set minimums.

If a contract demands $2M per occurrence, that's your floor regardless of preference. Map these first. How much business insurance do I need.

Then size to your worst realistic claim

For everything beyond contract minimums, ask: what's the largest plausible third-party injury or property damage claim my business could face? The answer scales with:

• Foot traffic — a busy retail store or restaurant has far more slip-and-fall exposure than a quiet office.
• Physical work on others' property — contractors, cleaners, and installers can cause significant property damage.
• The value of property you work around — damaging a $50,000 floor vs. a $5,000 one changes the math.
• The severity of potential injuries — businesses where a serious injury is plausible need higher limits.
• Your client profile — higher-value clients tend to bring higher-stakes claims.

A serious bodily injury claim — surgery, long-term care, lost wages, pain and suffering — can climb well past $1M on its own. If that's a realistic scenario for your business, the standard limit is your starting point, not your ceiling.

The role of a commercial umbrella

When your underlying GL feels right for routine claims but exposed to a true catastrophe, a commercial umbrella adds excess liability on top — often a large amount of additional coverage for a relatively modest premium. It's how a small business affordably protects against the rare six- or seven-figure judgment without over-buying on the primary policy. For many businesses, a $1M GL plus a $1M–$5M umbrella is more cost-effective than a high standalone GL limit.

Don't confuse per-occurrence with aggregate

A $1M/$2M policy means $1M for any single claim and $2M total for the year. A business that could face multiple claims in a year — high traffic, many job sites — can exhaust the aggregate even if no single claim hits the per-occurrence limit. If that's you, size the aggregate, not just the per-occurrence number. Business insurance terms explained.

The sizing analogy

Setting your limit is like choosing the load rating on a shelf bracket. You don't rate it for the average item you'll set down — you rate it for the heaviest thing that will ever realistically sit there, plus margin. Rate it to the average and it holds fine until the one day it doesn't, and the failure happens precisely when the load is highest. Size GL to the worst plausible claim, not the typical one.

A quick gut-check

For your business, finish this: "If someone were seriously hurt or their property badly damaged because of us, the claim could plausibly reach $______." If that number is at or above your current per-occurrence limit, you're underinsured. A broker can run this across your operation and price the umbrella option. How brokers help.