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: During an open house event you host in a home with an extensive collection of antiques, you accidentally knock an expensive figurine off a shelf and it breaks. General liability insurance would cover the replacement cost of the figurine.

Example 2: While you show a potential buyer around a house, he slips on a cord you failed to cover, breaks an arm, and decides to sue. General liability insurance would cover the potential buyer’s medical bills, your legal fees, and any damages awarded by a court.

Example 3: While conducting a walkthrough of a home after a showing, you fail to turn off the bathroom fan. After you leave, the fan motor overheats and ignites a fire that damages half the home. General liability insurance would cover the cost to repair or replace the damaged home.

Example 4: You want to partner with a large franchise company that requires evidence of general liability insurance. Having this coverage would help fulfill your eligibility requirements.

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

On average, real estate companies in America spend between $400 - $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 Real Estate Companies 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 real estate companies should obtain:

Professional Liability Insurance

Because most real estate transactions involve large sums of money, professional liability insurance is essential. This coverage, also known as “errors and omissions” insurance, protects you when a client sues because they are unhappy with their transaction, claiming your professional advice and representation is at fault.

Commercial Auto Insurance

If you use a personal car for business activities, your personal auto policy may not cover losses from a work-related accident. State law mandates minimum levels of commercial auto coverage to protect both you and others on the road in the event of an accident. While each state requires a certain level of insurance for vehicles on public roads, the minimum requirement only offers basic protection. As such, consider purchasing limits greater than those required by state law.

You can purchase commercial auto insurance as a standalone policy or as part of a business owners’ policy (BOP).

Commercial Property Insurance

As a real estate agent, you know how expensive it can be to repair or replace a damaged building. If you own the building in which you operate, you need commercial property insurance to cover your building and the business property stored there in the event of a fire, burglary, or natural disaster.

You can typically purchase this coverage as part of a business owner’s policy (BOP).

Types Of Coverage Some Real Estate Companies May Need

In addition to the policies outlined above, there are a few other types of coverage your real estate company 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.

Commercial Umbrella Insurance

For many of your clients, real estate transactions are expensive and emotional. As a result, you face greater liability exposure than other businesses. While your general liability policy covers most claims, some lawsuits may be so expensive that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for legal fees and awarded damages that exceed your primary policy.

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.