There are several choices when it comes to business insurance. One of the most commonly needed and purchased is business liability insurance. Business liability insurance is sometimes called general liability insurance or general liability insurance and professional liability insurance combined in one policy.
Liability insurance helps protect businesses from being held responsible for injuries or damages to a third party. It covers business owners in the unlikely event of an accident happening on their property or other property and financial damages caused by their actions to their clients. The coverage is there to help with legal fees should the business owner get sued if someone else gets hurt in their store.
- How much does business liability insurance cost?
- How much is the average business liability insurance cost per month?
- What factors affect business liability insurance cost?
- How to save money on business liability insurance?
- What is business liability insurance?
- Who needs business liability insurance?
- Is business liability insurance required for all small businesses?
- Business liability insurance companies
How much does business liability insurance cost?
Based on our research, small businesses should expect to pay approximately $85 per month for business liability insurance. That’s about $1,000 per year. Approximately 52% of small business owners pay premiums that land somewhere between $700 and $1,400 each year. If you spend less than $700 annually, you fit within 20% of small business owners in our study.
This includes general and professional liability coverage for small businesses. However, the main coverage of the policy is for general liability insurance. Professional liability coverage is just an add-on endorsem*nt.
This is just the average. Your quotes and rates will be different. Be sure to shop around with a few companies or work with a top broker like CoverWallet or ez.insure to get and compare several quotes online to find the cheapest one for your business. Getting a fast quote online with Thimble is another good idea. It shouldn’t take you more than 5 minutes to get a good idea how much a business liability insurance policy will cost you.
How much is the average business liability insurance cost per month?
The average business liability insurance cost per month is $85. This includes both coverages: general liability and professional liability with the monthly cost breakdowns below:
| Business liability coverages | Average cost per month |
| General liability insurance | $60 per month |
| Professional liability insurance | $25 per month |
All business liability insurance policies are not created equal. Limits and deductibles can fluctuate between companies. Additionally, customers can choose to bundle business liability with other coverages to have a more comprehensive coverage package. Both of these are factors affecting the cost of business liability insurance premiums.
Learn more at small business insurance cost
What factors affect business liability insurance cost?
Several factors can affect the cost of your business liability premiums. Here are five of the main factors:
The business you have
The industry you work within factors into your insurance premium costs. Different industries have different risk levels, and insurance companies factor that into the cost of premiums. Businesses or services that routinely deal with other people’s property incur higher risks than those that don’t.
Your location
Is your business in a flood zone or the middle of Tornado Alley? Are you located in a particularly high-traffic zone? Insurance companies factor these conditions into how they write policies and charge premiums. The riskier the area you live in, the higher your premiums will be.
Your business’s size
The bigger your business is, the higher risk your business is exposed to. This is just simply logical. The more customers you have, the more locations you have, the more likely accidents will happen in one of your locations, and the more likely one of your customers would sue you. This also means that higher revenue can result in higher cost of your business liability insurance policy.
Whether you rent or own your space.
It may seem inconsequential whether you own or rent your business space. However, property owners sometimes incur higher premiums than those that rent their spaces because they have more responsibility for risks involving claims occurring on the property.
The history of claims.
If you’ve ever had claims against a business insurance policy, those will affect your current policy premiums. For example, if your delivery vehicle has been in several accidents, even if you weren’t driving, the insurance company could look at it as a pattern of risk and charge you more for your premiums.
How to save money on business liability insurance?
Business liability insurance is a necessary expenditure, but that doesn’t mean you have to break the bank to pay for it. Here are a few tips on saving money on your business liability insurance policies.
Bundle policies
Sometimes you can find discounts by purchasing more than one policy from the same insurance company. For example, bundling your property insurance with your liability policy creates a business owner’s policy, which could reduce your premiums.
Pay your annual premiums in a lump sum
Usually, insurance companies allow you to pay premiums either monthly or annually. While the monthly premium may seem like savings, you usually save money if you can pay yearly. This is because many insurance companies at a convenience or installment fee to your monthly premiums, so you will pay more overall if you pay the premiums monthly.
Be proactive with risk management
If you have no claims history on your insurance record, you likely will have lower insurance premiums. Creating a company risk management plan can help you maintain that clean claims history. Here are some ways to be proactive about risk management.
- Consider a security system a positive investment.
- Thoroughly train all employees regarding safety and sensitivity.
- Create rules for social media posts.
- Create procedures. Make checklists to remind everyone of the systems. Routinely review whether procedures are being followed.
- Keep hazards to a minimum in the workplace if possible.
Always compare quotes
Last but not least, always shop around with a few companies or work with a top broker like CoverWallet or ez.insure to get and compare several quotes to select the cheapest one for you. Different insurance companies assess risks differently and they all have their own business strategies to be in favor for or not in favor for particular industries, that impact their pricing strategies for your business. Getting a fast online quote from Thimble is another good way, even just to see the ballpark of your liability insurance cost.
What is business liability insurance?
Business liability insurance is either general liability insurance or a combination of general liability insurance and professional liability insurance. Most, if not all, small businesses need general liability insurance. Some small businesses may need professional liability insurance more than the others. For example, a small accounting firm will need professional liability insurance coverage more than a small restaurant. If your business is involved with providing customers with advice and services, it is likely that you will need professional liability insurance coverage.
Learn more at the general liability insurance cost and professional liability insurance cost
Who needs business liability insurance?
Small business owners are the most vulnerable to liability claims because they put their personal finances at risk if they face a lawsuit. Partnerships and sole proprietorships face the most significant risk of losing personal finances to business claims. Therefore, they are in the direst need of business liability insurance.
Is business liability insurance required for all small businesses?
No state laws require small businesses to have business liability insurance. However, it is likely that customers or employers require it. For example, if you are a construction contractor, you clients won’t sign a contract with you until you can show them the insurance coverage proof. Similarly, if you work for a clinic as a nurse or a doctor, they may not employ you if you don’t have malpractice insurance for nurses or for doctors.
Even if you customers and clients do not require you to have the coverages, it is still highly advisable for you to have business liability coverage. Just a small law suit will bankrupt your business and your personal financial well-being. It is not worth skipping on the coverage.
Business liability insurance companies
Workplace accidents happen more often than we would like, so business owners need to ensure they and their interests are protected. While the hope is that nothing will occur within your business, it’s best to be prepared for any eventuality. Here are some of our recommendations.
- CoverWallet
- ez.insure
- State Farm
- Hiscox
- Nationwide
- The Hartford
- Travelers
- Liberty Mutual
- Progressive Commercial
This list is definitely not an exhaustive representation of the companies that offer business liability insurance.
Final thoughts
Liability insurance protects you from legal action if, for example, someone falls on your premises and gets hurt. Small business owners are at the greatest risk in the event of a liability claim, and that means they are in the greatest need of appropriate liability insurance. Business liability insurance is sometimes referred to as general liability insurance.
Business liability insurance is a necessary expenditure, but there are ways to lower your costs. Being aware of the risks that make liability insurance a necessity can help you put appropriate procedures in place to offset the risk. This could help you avoid making a claim against your business liability policy.
Various companies offer business liability insurance policies. Compare the coverages you need and the rates before deciding on the company that’s right for you.
As an expert in business insurance, it's crucial to emphasize the importance of business liability insurance in safeguarding businesses from potential financial risks associated with injuries or damages to third parties. My extensive knowledge in this field allows me to break down and provide insights into the concepts discussed in the article.
1. Business Liability Insurance Overview: Business liability insurance, commonly known as general liability insurance, offers protection to businesses against claims of injuries or damages to third parties. This coverage is essential for mitigating financial losses that may arise from accidents on business premises or actions that result in harm to clients.
2. Average Cost and Factors Affecting Business Liability Insurance:
- Average Cost: The article suggests an approximate cost of $85 per month, totaling around $1,000 per year for small businesses. The breakdown includes $60 per month for general liability insurance and $25 per month for professional liability insurance.
- Factors Affecting Cost:
- Business Type and Industry: Different industries pose varying levels of risk, influencing insurance premiums.
- Location: Geographic factors such as flood zones or high-traffic areas impact the risk assessment and premium costs.
- Business Size: Larger businesses with more customers and locations are exposed to higher risks, affecting insurance costs.
- Ownership of Space: Owning the business premises may result in higher premiums due to increased responsibility for on-site risks.
- Claims History: Previous claims against a policy can lead to higher premium costs.
3. Saving Money on Business Liability Insurance:
- Bundle Policies: Combining multiple policies from the same insurer, such as property and liability insurance, can result in discounts.
- Annual Premiums: Paying premiums annually rather than monthly often leads to cost savings.
- Risk Management: Proactive risk management practices, including security systems and employee training, can contribute to lower premiums.
- Comparing Quotes: Regularly comparing quotes from different insurers or brokers allows businesses to find the most cost-effective coverage.
4. Who Needs Business Liability Insurance:
- Target Audience: Small business owners, especially those in partnerships or sole proprietorships, are most vulnerable to liability claims. Their personal finances are at risk without adequate insurance coverage.
5. Legal Requirements and Customer Expectations:
- Legal Requirements: While no state laws mandate business liability insurance, customers or employers often require proof of coverage. For instance, construction contractors may need insurance to secure contracts.
- Customer Expectations: Clients and customers may demand insurance coverage as a condition for entering into agreements, emphasizing its importance.
6. Business Liability Insurance Companies:
- The article lists several insurance companies that offer business liability insurance, including CoverWallet, ez.insure, State Farm, Hiscox, Nationwide, The Hartford, Travelers, Liberty Mutual, and Progressive Commercial.
In conclusion, business liability insurance is a critical investment for small businesses, and understanding the factors influencing its cost can help businesses make informed decisions. Regularly evaluating coverage needs and comparing quotes from reputable insurers contribute to a well-rounded risk management strategy.
