Small Business General Liability Insurance Cost; All You Should Know

Small Business General Liability Insurance Cost; All You Should Know

If you’re planning to start your own small business, you may be wondering what type of insurance you need and how much it will cost. Your general liability insurance cost will vary depending on many factors, including the type of industry you’re in, your business structure, and whether or not you have employees.

Here are some basic answers to common questions about small business general liability insurance cost so that you can make sure your business stays protected at all times!

General Liability Insurance Cost

There are several variables that can affect your small business general liability insurance cost, including how much you’re willing to spend and where you’re located. For example, if you plan on spending less than $20,000 a year, your best bet may be an umbrella policy; if you operate in a high-risk industry like construction or real estate, it might be better to get coverage from a specialty insurer.

Regardless of where you look for coverage, be sure that any company offers an actual insurance product. There are many companies out there who will offer products with advertising and marketing support, marketing dollars, or other language that should set off red flags—they’re not selling insurance at all.

If you do find a good deal on general liability insurance, don’t forget to ask about deductibles and whether they apply per claim or per year. A higher deductible means lower premiums, but could also mean more money out of pocket if something goes wrong.

General Liability Insurance Monthly Cost.

There are many factors that influence how much general liability insurance cost. These include your company’s industry, your company’s size, and of course its location. Another important factor is whether or not you’re a new business owner or an experienced one.

If you’re new, you might find yourself paying more than a more established business owner would pay for general liability insurance per month. On average, small businesses will likely spend between $350 and $500 per month on coverage (though if you opt for umbrella coverage that number can go up).

Here are a few important things to consider:

Location:

If your company operates in an urban area like San Francisco or New York City, these areas will be more expensive due to higher crime rates. However, if you operate in rural areas like Iowa or Alabama, it’ll probably be cheaper.

Industry:

 Some Industries are riskier than others. For example, construction companies have a higher risk of accidents while law firms have less risk because they don’t work with dangerous equipment.

Company Size:

The larger your company is, the more protection it needs from potential lawsuits. This means that large companies typically pay more for their insurance policies than smaller ones do.

Experience Level:

New business owners tend to pay less for their policies since they don’t have as much experience handling lawsuits as older business owners do—but only until they’ve been sued themselves!

Average General Liability Insurance Premiums

According to a survey of small business owners, published by American Express Open, businesses paid an average annual premium of $1,190 for general liability insurance. However, according to a report by MarketScout Insights, general liability insurance premiums range from just over $500 per year (for part-time businesses) up to nearly $6,000 per year (for full-time professionals and larger companies).

Typically speaking, business with higher annual revenue pay higher premiums; however there are other factors that influence price too. For example, industry plays a role in pricing because different industries have different risk profiles. Similarly, the size of your company also impacts your rate: A small company is going to pay less than a large one.

The number of employees you have can also affect your premium cost—the more employees you have on staff, generally speaking, will mean you’ll pay more. Additionally, if you operate in certain high-risk sectors like construction or manufacturing, you may be required to purchase additional coverage or even get a separate policy altogether.

How to Save Money on General Liability Insurance

A Key Part of Your Business’ Budget (Without Sacrificing Coverage) Before you get started on your path toward finding small business general liability insurance cost, it’s a good idea to familiarize yourself with some basics. From types of coverage and deductibles to what you’re actually getting for your money, here are a few terms that should help you start to understand how general liability insurance works:

Annual Premium:

 Theprice tag for keeping your policy in force. Deductible: The amount you need to pay before your insurer will begin covering losses under an umbrella policy. For example, if you have a $5,000 deductible and suffer $10,000 worth of damage from a fire at your store, you would be responsible for paying $5,000 out-of-pocket until your insurer pays out.

Per occurrence limit:

This is another way to say the most we’ll pay per claim. If you have a per occurrence limit of $1 million and suffer two separate incidents during one year that result in claims totaling $500,000 each—for example fires at two different locations—your insurance company would only cover up to $1 million total.

Aggregate limit:

This is just like it sounds—the maximum amount any one insured person can collect over time or across multiple policies within one specific period.

Getting A Quote For Your Business

Once you’ve identified your business needs, it’s time to start shopping around for insurance. Most insurers allow businesses to get a quote online or over the phone, often giving access to instant rate comparisons and an easy way of quoting more than one company at once. If you have a broker, they can also handle all of these steps for you.

Either way, it’s usually worth speaking with several providers before making your decision; getting several quotes will help ensure that you’re getting the best deal possible. You should also be aware that some large companies don’t sell insurance directly—instead they go through brokers or other intermediaries. The most common intermediary is a captive agent, which is essentially an in-house agent for a single insurer.

While captive agents can provide excellent service and make sure you’re getting competitive rates, their loyalties lie with their parent company first. Because of that, it’s important to do your research before choosing any particular provider. Make sure you know what kind of reputation each has among customers—both good and bad—and always ask about commission structures when talking to anyone about insurance plans.

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What Else Do I Need?

Depending on your business, you’ll likely need additional types of insurance. For example, if you operate in a dangerous industry like construction or manufacturing, you may require workers’ compensation and employers liability insurance.

In addition, if your business is headquartered in an area prone to natural disasters (say, a flood zone or tornado alley), then flood and/or wind coverage may be worthwhile investments as well. If your new company handles sensitive data like credit card information or Social Security numbers for clients, it’s also smart to consider adding a cyber-liability policy.

Finally, if you have employees who work from home or telecommute frequently, a disability insurance policy can help cover their lost wages should they become injured or ill.

Additional Resources

Check out our Small Business Guide on small business insurance or find an insurance agent that specializes in small business insurance policies. (The two most common types of policies you’ll need are general liability and property coverage.)

Once you have your policy, learn how to read your policy. If there’s anything confusing, talk with your agent and make sure you’re completely clear on what’s covered and what isn’t. Lastly, double-check that you have enough coverage for all potential risks in your business.

It is important to keep these tips in mind as they can make a huge difference in terms of cost if something unexpected happens at one of your events or locations where food is being prepared!

Frequently Asked Questions about General Liability Insurance Costs

What type of coverage should a small business purchase?

A standard package covers property damage, bodily injury and personal injury claims related to your business.

What do you mean by claims related to your business? If a customer slips and falls on water in your store and decides to sue you, general liability insurance covers that claim. The liability policy won’t cover injuries caused by your negligence (if an employee accidentally cuts someone with a knife, for example).

And if you need medical malpractice insurance – which does cover medical mistakes — it’s usually purchased separately from liability insurance. If a contractor working on your building accidentally injures another person on site, general liability would cover it as well.

How much does general liability cost?

That depends on a number of factors, including: where you live; how many employees you have; what kind of work your company does; and how much coverage you want. For example, if your company works in high-risk areas like construction or manufacturing, expect to pay more than someone who runs an office supply store. On average, expect to pay about $600 per year for $1 million worth of coverage.

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How can I save money on my policy?

Shop around and compare quotes from multiple insurers before purchasing a policy. Also consider raising deductibles or decreasing limits: Increasing deductibles will lower premiums while decreasing limits will raise them but increase protection against losses.

Finally, take advantage of any discounts offered by your insurer. Some common ones include being part owner of a company, having no prior claims history and paying annually instead of monthly.

What types of businesses require general liability insurance?

Any business that has customers or clients is required to carry some form of liability insurance under most state laws. In fact, some states even require sole proprietorships – businesses owned by one individual — to carry at least basic policies covering accidents occurring within their stores or offices. If you’re not sure whether you need a policy, contact your state department of insurance for guidance.

What if I already have workers’ compensation coverage?

Most businesses are required to carry workers’ comp insurance, which covers workplace injuries. But general liability is often necessary too because it protects you from lawsuits resulting from non-workplace incidents involving third parties such as customers or vendors. Workers’ comp also doesn’t protect your business from claims arising out of your own actions, so carrying both policies provides maximum protection for your business.

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Do I need commercial auto insurance?

This varies depending on what kind of vehicle(s) you use for business purposes and how often they’re used. Check with your state’s department of motor vehicles to find out whether commercial auto insurance is necessary in addition to general liability coverage.

What else should I know about general liability insurance costs?

Small business general liability insurance cost is necessary for any business that hires employees, has products or services it sells to the public, or rents property. This type of insurance protects your business from legal damages and lawsuits related to bodily injury or property damage you cause while conducting business. However, despite its necessity and benefits, this type of insurance can be costly depending on the nature of your business and location.

The last thing you want as a small business owner is to get sued by an unhappy customer, or worse, have your business go out of business because you couldn’t afford the cost of legal fees and expenses in defending yourself from a suit. In order to protect your financial future, it’s vital that you have the right general liability insurance coverage from the moment you start your small business operation until the day you stop doing business. Make sure you get the right company!