About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.


Learn more about the risks covered by general liability insurance.

Example 1: A guest slips and falls while taking a shower in your rental. He sustains injuries and decides to take legal action against you to cover his medical bills. The general liability insurance policy you carry will pay for the cost of hiring an attorney and any settlement that you may wind up paying, up to your policy limits.

Example 2: A clogged gutter causes water to pool on the walkway to the house, which then freezes into an ice sheet during winter. A guest is bringing groceries inside the rental when she slips on the ice, falls, and sustains injuries. She files a lawsuit against you. Your general liability coverage will pay for your legal defense costs and the cost of a settlement.

Example 3: A section of asphalt in the driveway of your rental is washed away in a storm. A guest fails to see the damage and rides his expensive racing bicycle into the damaged area, which bends the front wheel. Your general liability policy should cover the cost of repairing the broken bike.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost Of General Liability Insurance

The average airbnb in America spends between $350-$700 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Other Types Of Coverage Airbnbs Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all airbnbs should obtain:


Cyber Liability Insurance

Any information you keep related to your guests could be compromised by cybercriminals. If the information is stolen, guests could decide that you are responsible for the damage caused by the compromised information, and they could take legal action against you. Cyber liability insurance is designed to help cover the costs of hiring an attorney and any settlements that you wind up paying guests, up to your policy limits.


Commercial Property Insurance

If your commercial property is damaged, such as in the event of a fire or a major storm, repairs are likely to be expensive. A commercial property insurance policy will help to cover the cost of repairing the damage and replacing what needs to be replaced. With this kind of policy, you can get your rental fixed up and get back to renting the property out to guests.

Types Of Coverage Some Airbnbs May Need

In addition to the policies outlined above, there are a few other types of coverage your airbnbs may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.


Home-Based Business Insurance

If you run your Airbnb rental business from your home, there is a good chance that your homeowner’s insurance policy will not cover accidents related to your business. A home-based business insurance policy will ensure that you have more-comprehensive coverage, helping to pay for the cost of damage resulting from business activities.


Commercial Umbrella Insurance

During certain situations, like expensive lawsuits, the limits on your general liability insurance may be exhausted. Instead of needing to pay the extra costs out of pocket, you can carry a commercial umbrella insurance policy. The umbrella policy will pick up where the general liability policy leaves off. Once the general liability limits are reached, the umbrella insurance will begin to pay up until the point where its limits are reached.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.