Check six things on the general liability policy you inherited: who it names, how it describes your work, its exclusions, its limits and aggregates, its additional insured endorsements, and whether it covers jobs the seller finished before closing. General liability usually responds when someone outside the business says you hurt them or damaged their property, subject to the policy wording. It does not cover your own employees, professional mistakes, most pollution, vehicle accidents or your own property. This guide is for buyers who want to know whether the seller's policy fits the company they now own.
The short answer
- Confirm the named insured is your entity. Under the standard form, a new or acquired limited liability company is not covered unless the carrier lists it as a named insured.
- Match the classification and description of operations to what the business does today, including any services the seller added quietly or you plan to add.
- Compare each limit (per incident, per year, and for finished work) with your customer contracts, lease and loan agreement.
- Read the endorsements, not just the certificate: who is added as an additional insured, whether your policy must pay first, and whether any exclusion cuts out work you do.
- Claims about jobs the seller finished before closing are a gray area under the standard form. Get the carrier's position in writing and ask your attorney about liability.
What does general liability cover, and what does it leave out?
A commercial general liability policy generally covers claims that the business caused bodily injury or property damage to others, plus personal and advertising injury such as libel or copying someone's advertising idea, subject to its exclusions and limits. It usually also pays to defend suits seeking covered damages. Most small business policies use an occurrence trigger: under the standard Insurance Services Office (ISO) form, the policy that was in force when the injury or damage happened responds, even if the claim arrives years later. See occurrence vs claims-made.
| Not covered by general liability | Where it is usually covered |
|---|---|
| Injuries to your own employees | Workers' compensation and employer's liability |
| Mistakes in professional advice or services | Professional liability (errors and omissions) |
| Accidents involving vehicles the business uses | Commercial auto |
| Damage to your own building, equipment or inventory | Commercial property and inland marine |
| Most pollution and contamination claims | Pollution liability |
| Employee claims of harassment, discrimination or wrongful firing | Employment practices liability insurance (EPLI) |
Does the policy name the company you actually own?
Start the review with the named insured: the company the policy actually protects. In an asset purchase your new company is a different legal entity from the seller's, and the policy's rights cannot simply be transferred without the carrier's written consent. The standard ISO form also says no one is an insured for the conduct of a limited liability company, partnership or joint venture that is not shown as a Named Insured, so the entity has to appear on the declarations or a named insured endorsement. If a holding company or sister company should be covered too, ask for it to be added the same way. See wrong named insured after an acquisition.
Does the classification match what the business actually does?
Every general liability policy describes the business and assigns it one or more classifications. The carrier priced the policy, and may have limited it, based on that description. Over years of owner-run operation, the work often drifts away from what the policy says: a residential service company starts doing commercial jobs, a distributor starts light assembly, a cleaning company adds post-construction cleanup.
A mismatch causes two problems. Premium may be wrong, because general liability is usually rated on an exposure basis such as sales or payroll and the rate depends on the class. More seriously, some policies carry an endorsement that limits coverage to the operations described on the declarations, so work outside the description may not be covered at all.
Check three things: the written description of operations, the class codes and their exposure estimates, and whether your plans for the next year (new services, new customer types, add-ons) would push the business outside them. If the gap is real, ask your broker to request an endorsement from the carrier now rather than waiting for the audit.
Which exclusions could cut out work you do?
Ask for the full forms schedule, the list of every form and endorsement on the policy, and look for endorsements that remove whole types of work or claims:
- Classification limitation or designated operations wording that limits coverage to the work described on the declarations.
- Designated premises exclusions that limit coverage to listed locations.
- Independent contractor or subcontractor conditions that require certificates, contracts or limits from anyone you hire.
- Action over or injury to employees of subcontractors exclusions, which matter for contractors.
- Residential, height or type-of-work limits for contractors.
- Professional services exclusions for design, consulting or advice.
Any of these can matter more after you change what the business does. Insurance exclusions that quietly kill coverage explains each one.
Are the limits and aggregates high enough for your contracts?
A general liability declarations page shows several separate limits. Each one answers a different question:
| Limit | What it means | What to check |
|---|---|---|
| Each occurrence | The most paid for any one incident | The per occurrence amount in each customer contract and your lease |
| General aggregate | The most paid in the policy year for most claims combined | Whether it applies per location or per project, or to everything combined |
| Products-completed operations aggregate | A separate annual cap for claims from your products or finished work | Contracts that require completed operations coverage for years after a job |
| Personal and advertising injury | Claims such as libel, slander or copying advertising | Marketing-heavy businesses and contracts that name it |
| Damage to premises rented to you | Under the standard form, damage by fire to premises you rent, and other damage only to premises rented for 7 days or less | Your lease. Many leases make you responsible for more than fire damage, which may need broader tenant legal liability coverage. |
| Medical expense | Small medical bills for injured visitors regardless of fault | Usually a low figure; rarely a contract issue |
Limits that fall short of a contract are often solved with a commercial umbrella rather than a higher primary limit, but only if the umbrella lists the general liability policy as underlying insurance and its terms match what the contract requires. The umbrella review covers that check.
Under the standard form, the general aggregate is one annual pool for most claims across the whole policy. A business with several locations or many job sites can use up that pool with one bad year at one site, leaving less for everything else. Per location and per project aggregate endorsements give each location or project its own aggregate, and many construction contracts require the per project version. See per project aggregate and general aggregate vs per occurrence.
Do the additional insured endorsements match your customer contracts?
Many customers, general contractors and landlords require you to add them as an additional insured on your general liability policy, often with specific wording. The certificate the seller sent them is only a summary; the endorsement on the policy is what counts. Compare each contract with the endorsements for these points:
- Who is covered: a blanket endorsement usually covers anyone you agreed in a written contract to add, depending on its wording; a scheduled one covers only the names listed.
- Ongoing and completed operations: some contracts require coverage while you work and for a period after the job is finished. These are often separate endorsements.
- Primary and noncontributory: the contract may require your policy to pay before the customer's own insurance. See primary and noncontributory.
- Waiver of subrogation: the contract may require your carrier to give up its right to recover from the customer.
Blanket endorsements usually apply only to written contracts signed by the named insured before the injury or damage, and current ISO versions give the additional insured no more than the contract requires. If key contracts are still in the seller's name and were never assigned to your entity, a blanket endorsement on your policy may not reach them.
Many customer contracts also ask you to indemnify the customer. Under the standard form, general liability covers some liability you take on in a written contract (an "insured contract"), but endorsements can narrow that, so ask your broker whether contractual liability has been limited on your policy.
After an acquisition, contracts may be assigned to your new entity or renegotiated, and the seller's certificates may promise things the current policy does not deliver. How to check your customer contracts against your policies walks through the comparison, and certificates the seller issued covers clean-up.
A hypothetical example. A buyer acquires a heating, ventilation and air conditioning (HVAC) contractor that has done mostly residential service work. The policy describes residential service and carries a $1 million per occurrence and $2 million general aggregate limit, with a blanket additional insured endorsement for ongoing operations only. The buyer's growth plan is commercial installation, and the first general contractor contract requires a per project aggregate, additional insured coverage for completed operations, and primary and noncontributory wording. None of that is on the policy. Before signing, the buyer asks the broker to update the description of operations, add the per project aggregate and completed operations additional insured endorsements, and confirm the umbrella follows. The carrier agrees after reviewing the new work, at a higher premium, and issues the endorsements before the buyer signs, rather than the buyer discovering the gap after a claim.
Will your policy cover jobs the seller finished before closing?
The products-completed operations hazard covers injury or damage that happens away from your premises and arises from your product or your finished work. For a contractor or installer, this is often where the largest claims come from, sometimes years after the job.
Whether your new policy responds to a claim about the seller's pre-closing work is not settled. The standard form treats an acquired business's products as yours, but it has no matching language for its completed work. Whether you are liable at all is a question for your attorney.
The seller's old occurrence policies generally respond only to injury or damage during their policy periods, so an injury after closing from work done before it can fall between those policies and yours. This is mainly an asset purchase issue; in a stock purchase the company itself did the work. Ask your broker to get the carrier's written position on the seller's past work before a claim tests it. For a leveraged buyer, an uncovered claim over a seller-era job is paid from the same cash that services your loan. See completed operations claims from the seller's past jobs for the options to close the gap, and who is liable for work the seller did.
What belongs on your general liability checklist?
| Item | Where to find it | Red flag |
|---|---|---|
| Named insured | Declarations page | Seller's entity, or your new limited liability company missing |
| Description of operations and classes | Declarations and class schedule | Work the business does that is not described |
| Exposure estimates | Class schedule | Sales or payroll far from current figures |
| Limits | Declarations page | Below any contract, lease or loan requirement |
| Aggregate structure | Endorsements | No per project or per location aggregate where contracts require one |
| Additional insured, waiver, primary wording | Endorsements | Certificates promise what the endorsements do not provide |
| Restrictive exclusions | Forms schedule | Classification limitations or exclusions for work you do |
| Loss history | Loss runs (five years) | Open claims, or repeated claims of one type |
Morrow can line up your general liability endorsements against each customer contract and flag where the certificate promises more than the policy gives; any changes depend on the carrier.
Keep reading
- New Owner Review: Umbrella and Excess Liability
- How to Check Your Customer Contracts Against Your Policies
- Completed Operations Claims From the Seller's Past Jobs: Who Pays?
- Wrong Named Insured After an Acquisition: Entities, DBAs and Holdcos
- Insurance Exclusions That Quietly Kill Coverage
- All guides for new business owners
Frequently asked questions
Does the seller's general liability policy cover me after I buy the business?
Not automatically. In an asset purchase your new company is a different legal entity, and the policy cannot be transferred without the carrier's written consent. In a stock purchase the same entity continues, but you should still tell the carrier and check the policy. Confirm with the carrier and your broker before relying on it.
Will my general liability policy cover a claim about work the seller did before I bought the company?
It depends on when the injury or damage happened, how the deal was structured and the policy wording. The seller's old policies generally respond only to damage during their own policy periods, so an injury after closing from work done before it can fall in a gap. Get your carrier's position in writing; see completed operations claims from the seller's past jobs.
How much general liability coverage does my business need after an acquisition?
Start with the highest limit any customer contract, lease or loan agreement requires, then consider your largest realistic claim. Many businesses meet higher requirements with an umbrella over the general liability policy rather than a bigger primary limit.
Does general liability cover injuries to my employees?
No. The standard general liability form excludes injuries to your own employees. Work injuries to employees are generally handled by workers' compensation and employer's liability insurance, depending on your state and your policies (in North Dakota, Ohio, Washington and Wyoming, workers' compensation comes from the state fund and employer's liability is usually added separately). General liability is built for injuries to people outside the business, such as customers and visitors.
What is the difference between being a certificate holder and an additional insured?
A certificate holder simply receives proof that you carry insurance. An additional insured is added to your policy by endorsement and can make a claim under it, within the terms of that endorsement.
References
- Insurance Services Office: Commercial General Liability Coverage Form CG 00 01 12 07 (carrier-hosted copy)
- Insurance Services Office: Common Policy Conditions IL 00 17 11 98 (carrier-hosted copy)
- American Academy of Actuaries: Influential Features in the Workers' Compensation System (October 2025)
- IRMI: Stop-gap endorsement (glossary)
Just bought a business? Get your insurance reviewed.
Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.