General Liability Insurance in Texas: What It Covers and What It Doesn't

If you have a business in Texas—whether it's an LLC, a food truck, a cleaning service, a retail store, or you work as a contractor—you have probably already heard about General Liability Insurance. It is the core policy that many landlords, corporate clients, and general contractors will ask you for before signing a contract.

But what does it actually cover and what does it leave out? Here we explain it to you straight, with concrete examples and the most important exclusions every business owner should know.

What is General Liability Insurance?

General Liability (also called Commercial General Liability or CGL) is a commercial general liability policy that protects your business when a third party—client, vendor, visitor—suffers bodily injury or property damage as a result of your operations.

It is the coverage that responds when someone slips in your shop, when your employee damages a client's property while working, or when an advertising campaign generates a defamation lawsuit. It does not cover professional errors, it does not cover your own property, and it does not cover your employees—for that, there are separate policies that we will look at later.

What can a General Liability policy cover?

Third-Party Bodily Injury

If a customer slips in your business, if a visitor gets injured by your equipment, or if someone gets hurt as a direct consequence of your operations, General Liability can cover medical expenses, legal defense, and corresponding settlements or indemnities.

Third-Party Property Damage

If you or one of your employees damages a client's property while rendering a service—for example, a plumber who breaks a wall, a cleaning service that damages a piece of furniture, or a contractor who hits a neighbor's property—this coverage responds for the damage caused.

Personal and Advertising Injury

Covers claims for defamation, slander, invasion of privacy, wrongful use of advertising material, or copyright infringement in your advertising. For example, if you use a photo without permission on your website and the owner sues you, this coverage can respond.

Legal Defense in Covered Claims

One of the most valuable aspects: the policy pays attorney fees and legal defense costs in covered claims, even if the claim turns out to be groundless. Defense costs can quickly exceed the amount of the original claim—and this coverage protects you from day one.

Real examples of situations where it can respond

These are typical cases we see in small and medium-sized businesses in Texas:

• A food truck: a customer burns themselves with hot food due to defective packaging and sues the business.
• A cleaning service: an employee accidentally breaks a crystal chandelier valued in the client's home.
• A contractor: during a remodeling project, a worker damages a neighbor's pipe and the neighbor claims damages.
• A retail store: a customer slips on a floor wet from a leak and suffers a fracture.
• A service business: an advertising campaign uses a copyrighted image and the photographer demands compensation.

What does General Liability NOT cover?

This is the part that many business owners discover too late. General Liability has important exclusions you should know about:

Professional Errors and Advice — E&O

If your business provides professional services—consulting, accounting, design, technology, insurance—and a client claims that your advice caused a financial loss, General Liability does not cover that claim. For that, you need an Errors & Omissions (E&O) or Professional Liability policy, which is a completely separate coverage.

Vehicle-Related Damages or Accidents — Commercial Auto

If your business uses vehicles—owned, rented, or employee-owned—to transport equipment, merchandise, or people, auto accidents are excluded from General Liability. You need Commercial Auto Insurance to cover those risks.

Employee Injuries — Workers' Compensation

General Liability explicitly excludes employee injuries. If a worker is injured on the job, that coverage does not apply. For that, there is Workers' Compensation, which is a separate policy and mandatory in Texas for certain employers who contract with the government or wish to limit their liability.

Damage to Own Property — Commercial Property

General Liability covers damage to third-party property, not yours. If your premises catch fire, if your equipment is damaged by theft or a natural disaster, you need Commercial Property Insurance to cover your building, inventory, equipment, and improvements.

Cyberattacks and Data Breaches — Cyber Liability

If your business suffers a hack, a customer data breach, or ransomware, General Liability does not respond. You need Cyber Liability Insurance, which covers notification, recovery, legal defense costs, and potential regulatory fines.

Who should consider this coverage?

Practically any business that interacts with the public, third-party property, or clients on their premises should consider General Liability. It is especially important for:

• Contractors and subcontractors (construction, plumbing, electrical, painting)
• Cleaning and maintenance services
• Food trucks and restaurants
• Retail stores and beauty salons
• Professional service businesses that visit clients
• Landlords and property managers
• Businesses renting commercial space

Even if your business operates from home or remotely, General Liability may be necessary if you visit clients, if you have employees, or if a corporate client demands a Certificate of Insurance as a contractual condition.

How much General Liability does my business need?

There is no single answer—it depends on your industry, size, clients, and the contractual requirements you face. However, these are some common benchmarks in Texas:

• General limit: $1,000,000 per occurrence and $2,000,000 aggregate is the standard most requested by landlords and corporate clients.
• Contractors: $1M/$2M or more is frequently required, depending on project size.
• Businesses with commercial space: landlords typically require a minimum of $1M per occurrence and to be named as an Additional Insured.
• Businesses with employees: may require a higher limit and be combined with Workers' Comp and Commercial Auto.

Beyond the limit, also review the deductible, industry-specific exclusions, and whether the policy includes additional coverages like Products & Completed Operations or Additional Insured.

Frequently Asked Questions