How do I know how much general liability coverage I need?

Complete Guide to Determining General Liability Coverage

Why This Question Matters for Colorado and Utah Residents

General liability (GL) insurance is not just a checkbox—it's one of the most critical forms of protection for businesses in Colorado and Utah. The right coverage safeguards against costly lawsuits, property damage claims, and accidents that could otherwise threaten everything you've built.

• Contractual and Legal Requirements: In Larimer County, CO, government and commercial contracts typically require $1M per-occurrence / $2M aggregate GL limits. Utah contracts often set similar minimums. Missing these can mean lost business or breached contracts.
• Industry-Specific Risks: Construction contractors in Denver and Salt Lake City face higher liability due to jobsite injuries or defect claims—these businesses see average annual premiums over $3,000 and are often sued for sums exceeding $80,000 per event.
• Local Risk Patterns: Retail stores in Fort Collins and fast-growing Provo face increased slip-and-fall risks—premises liability makes up 56% of GL claims regionally, with median claims often in the $50,000–$100,000 range.

What Most People Get Wrong

Many business owners select the lowest available coverage to minimize their premium, believing claims are unlikely or that contract requirements will never be enforced. In reality, Colorado sees 74% of uninsured businesses forced to close after claims exceeding $100,000. Another common error: not updating coverage after growth—expanding operations, additional locations, or contracts with higher liability requirements all demand regular review.

It's also easy to overlook regional risks like hailstorms in Northern Colorado (spiking liability/property claims each June) or the fine print on what your policy excludes (product defects, event liability, cyber exposures).

The Complete Picture

The right coverage isn't just about complying with local regulations—it's about protecting your financial stability and your future. A good starting point is to match contract requirements (often $1M/$2M) but then assess your specific exposures:

• Business Type: Retail, contractors, agriculture, and landowners all face unique risks. For example, retail shops in Fort Collins may want to consider higher limits due to high foot traffic and a 26% higher local crime rate than average.
• Potential Claim Size: The average general liability claim in CO/UT is over $60,000, but many breach $100,000—especially for construction defects or third-party injuries.
• Contractual Obligations: Review all contracts (landlords, clients, city/county licenses) for mandated liability limits and clauses for additional insureds—Larimer County requires documented $1M/$2M for contractors and landlords in Utah often require certificates with precise limits.
• Business Assets at Risk: If your business holds significant assets or is a growth target, higher coverage helps shield both business and sometimes personal assets in a judgment.

Work with an experienced independent broker who understands Colorado and Utah contract norms and can advise on industry claims trends and cost-saving coverage combinations. They’ll help you choose limits that meet both your legal needs and your peace-of-mind needs.

Making the Right Decision for Colorado and Utah Residents

Question 1: How exposed is my business to local liability risks?

Consider your business type, location, and daily operations:

• Retail or food businesses in high-traffic Colorado locations (like Fort Collins’ Old Town or Denver’s South Broadway) often face slip-and-fall or theft claims—factor in higher limits to match these risks.
• Contractors in Utah’s expanding suburbs may encounter stricter building/site requirements—review project contracts for coverage clauses and local regulation compliance.

Question 2: What do my contracts and partners require?

Review all agreements:

• Landlord or lease: Many require you to list them as "additional insured" and maintain $1M per-occurrence coverage (sometimes higher).
• City, county, or vendor: Public contracts may require $2M aggregate limits and strict documentation.
• If your contract requirements exceed your policy, you’ll be responsible for any uncovered claims—potentially tens of thousands out-of-pocket.

Question 3: Will my coverage keep up as my business grows?

Your liability risk grows as you add employees, locations, or take on larger projects. Colorado businesses experiencing rapid growth (like those in Weld or Larimer counties) need to review limits annually—underinsuring is a leading cause of business closures after major claims. Secure scalable coverage that grows with you, and always reassess at milestones or contract changes.