When you run a business, one of the types of insurance that people are going to recommend that you carry is general liability insurance. General liability insurance is not required as a business owner, but it is a smart business move to make.

Important Fact #1: Covers Lawsuits Filed by Third Parties

General liability insurance is designed to cover when a third-party file a legal lawsuit against your business. It does not cover when an employee gets hurt at work, that is what your worker's compensation insurance is for.

It only covers legal fees from defending against a third-party. A third party could be a customer, or a supplier you work with, or a professional who is providing you with a service.

Important Fact #2: Not a Legal Requirement

There is no law that says that you must carry a general liability insurance policy like there is for car insurance in most states. In some states, if you offer a professional service such as plumbing or electrical work, you may need a policy in order to get a business license.

However, you will find that many contracts and other business interactions will be based on you carrying a general liability insurance policy. For example, a landlord may only agree to rent to you if you carry a liability policy, or a vender may only agree to work with you if you have a liability policy. Or if you bid on a government contract, you may only be able to get it if you have the right policies in place.

So, although it is not a legal requirement, it is a smart business idea to carry a liability insurance policy.

Important Fact #3: Can Save Your Business

If someone is hurt on the premise of your property, and you don't' have a liability insurance policy, and they sue you for their medical bills, lost wages, as well as pain and suffering, your business could go under. Having to pay all those expenses can easily put you out of business. With a liability insurance policy, your business can make it through someone getting injured at your business.

As a small business owner, getting a liability insurance policy is one of the smartest moves you can make. It will cover you if a third-party files a lawsuit against you, and although it is not a legal requirement, it is necessary for most business transactions. It can save your business if you ever face a lawsuit.