What Happens If You Don’t Have General Liability Insurance?
Running a small business comes with more than long hours and a relentless focus on growth. It also comes with risks that can threaten everything you’ve built. According to a study by the U.S. Chamber Institute for Legal Reform, America’s lawsuit system costs small businesses around $160 billion each year. With figures like that, going without general liability insurance for a small business is a gamble most owners can’t afford.
Financial Risks
A single lawsuit can devastate a small business. Legal defense fees alone can reach tens of thousands of dollars before a case ever makes it to trial. Without liability insurance for a small business, those costs come directly out of the owner’s pocket.
Settlements and damages — whether from a customer’s injury in your store or a claim of property damage caused by your work — can climb higher still. Some owners may be forced to dip into personal savings or even put their home at risk.
Beyond lawsuits, unexpected claims often create a ripple effect. Paying out-of-pocket means less cash flow for payroll, inventory, or growth investments. For many small businesses operating on thin margins, one claim can mean the difference between survival and closure.
Business Risks
The financial implications aren’t the only concern. A major lawsuit can result in business interruption or even permanent closure. Research shows that many small businesses never reopen after a catastrophic claim because they lack the safety net to recover.
There’s also the reputational impact. In today’s digital-first environment, news of a lawsuit spreads quickly. Customers may hesitate to work with a business facing legal trouble, and rebuilding trust can take years.
Then there are compliance and contractual hurdles. Some states and industries require proof of general liability insurance before issuing licenses. Vendors, landlords, and larger companies often mandate coverage as part of contracts. Operating without it can mean lost opportunities and a limited ability to compete.
Why Get Liability Insurance for a Small Business?
General liability insurance for small business acts as a shield against these risks. It covers defense costs, medical payments, and settlements tied to third-party claims, giving owners the freedom to focus on operations rather than courtrooms. More importantly, it provides peace of mind that your business — and your personal finances — are protected against the unexpected.
Oakwood Risk Insurance Solutions works closely with business owners to design coverage tailored to their industry, size, and exposure. Rather than relying on a one-size-fits-all policy, Oakwood Risk provides guidance and options that align with real-world risks. Along with other essential small-business coverages, general liability insurance enables businesses to remain resilient even when challenges arise.
Secure Your Small Business’s Future
The cost of liability claims against small businesses is staggering, and the reality is clear: operating without coverage leaves owners vulnerable to financial ruin, business shutdowns, and reputational harm. Securing liability insurance for a small business is not just a requirement in many cases — it’s the foundation of long-term stability.
Oakwood Risk Insurance Solutions helps small businesses take the guesswork out of coverage and build the protection required to thrive. Contact us to safeguard your business before a claim threatens your future.
FAQ About General Liability Insurance for Small Businesses
What happens if a business doesn’t have liability insurance?
Without insurance, businesses are responsible for paying legal defense costs, settlements, and damages out of pocket, which can lead to closure.
Is general liability insurance necessary?
Yes. While not always legally required, it is critical for protecting a business from lawsuits, covering compliance needs, and securing contracts.
What does general liability insurance typically cover?
It generally covers bodily injury, property damage, and personal or advertising injury claims against a business.
Can personal assets be at risk if my business doesn’t have coverage?
Yes. Owners may be forced to tap into personal savings, property, or assets if the business cannot cover legal costs and damages.
Oakwood
Oakwood Risk provides industry-leading insurance services, solutions, and counsel to our clients. Our professionals are valued for their ability to provide outstanding customer service, with a commitment to the relentless pursuit of value-added solutions, results, and comprehensive coverage.
