How Much Does General Liability Insurance Cost?

Liability Insurance Rates Vary by Business

Rates for general liability and other lines of coverage are typically priced by percentage of a business factor. For most businesses, GL insurance rates are priced per $1,000 in gross sales or revenue. For many contracting companies, it is priced per every $1000 in payroll. Some other businesses may have coverage based on the square footage of their facility depending on the insurance company pricing the business.

Small business liability insurance rates are based on several factors.

Businesses with a greater likelihood of claim frequency, and/or a greater likelihood of an expensive claim, often pay higher rates for liability insurance. A restaurant that does not serve alcohol will pay lower rates for coverage than a bar or pub. In regard to professional liability, doctors’ liability rates are generally higher than the rates for accounting firms. Similar to the laws of supply and demand, liability insurance rates go up as fewer insurance companies are willing to offer coverage or discounts.

Getting Better General Liability Pricing

Even though many insurance carriers now use predictive modeling, rates based on a predictive model of anticipated claims, to determine premium pricing, there are still other ways to help get better pricing on your next liability insurance quote. In most cases, insurance underwriters have the final word and the ability to apply credits and debits based on other underwriting information provided by the agent or the insured.
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Underwriters are more likely to offer policy credits when they feel like a business deserves them. Businesses who have had few or zero prior claims usually qualify for better pricing and lower rates. The prior experience of owners and managers within their respective industry may garner additional credits. Even the relationship between the insurance agency and the insurance companies impact rates. It’s important for insurance agents to understand their customers in a manner that best enables them to present and market a business to the carriers.

What Does Liability Insurance Cover?

A good definition for liability is something that increases the chances of something occurring. It is the catalyst or the cause of something else and then creates a financial obligation on the responsible party. In regard to liability insurance, a policy generally covers both property damage and bodily injury to a third-party.

Commercial general liability protects business owners from third-party liabilities.
If your business or employee causes damage to someone else’s property, your general liability insurance is designed to step and settle the debt, or claim, on your behalf. If an individual is hurt due to a businesses’ negligence, product or service, liability coverage will pay for medical bills and lost wages for the individual. Liability insurance is a transfer of risk. The insurance company promises to pay damages for certain risks in exchange for a premium.

Do I Need General Liability Insurance?

Every business needs general liability insurance, just as every homeowner or auto owner needs home and auto insurance. General liability insurance is the most basic and necessary coverage of all business insurance products. It is necessary for the legal protection of your personal and business property and assets. Liability insurance pays for legal claims made against your business when it causes an injury or harm to another party.

Liability Insurance and Contractual Obligations:

Many businesses are required to purchase GL insurance due to a contractual obligation. Liability insurance is typically required by banks for any business loans. Additionally, most commercial property owners require that all tenants have a general liability policy in place and naming the building owner as additionally insured. Finally, many franchisers, general contractors and other entities require their vendors and partners to buy general liability coverage.

How to Get Liability Insurance

The easiest way to get liability insurance is to contact an insurance agency that specializes in business insurance or request a liability quote online. It’s important for business owners to consider the agency size, their available markets and their specialization. Many smaller agencies do not specialize in commercial insurance and may not have contracts (agency appointments) with many insurance companies. Other agencies, such as Shelter, State Farm and American Family are known as captured agencies and, therefore, only represent their own corporate insurance company.

At General Liability Shop.com, all we do is business insurance. We’re a national B2B insurance agency licensed to sell property and casualty insurance in all 50 states. We are currently appointed with more than 35 national and regional insurance companies. We shop your liability insurance so you don’t have to.

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Save Money with a Business Owners Policy

A business owners policy, or BOP, is a custom designed general liability policy with other lines of coverage built in to the policy. A business owners policy is similar to a commercial insurance package policy in that they both are comprised of more than one line of insurance coverage. Most BOP products are specifically designed for select business types and include the most common lines of additional coverage needed for a specific type.

BOP coverage is highly targeted and insurance companies have custom BOP programs for most types of businesses. For example, The Hartford’s business owners policy for auto repair shops is completely different than the BOP programs for pest control or home inspectors. The reason they’re different is because each of these industries has special insurance needs related to their business.