General Liability Insurance: Cost Breakdown

General Liability Insurance

General liability insurance, also known as commercial or business liability insurance, is a base level of coverage that is commonly held by small and large businesses alike. This basic level of insurance is made to cover the cost where you may need insurance most, thus making it the standard across all industries.

Insurance companies cover several forms of injury and property damage under general liability insurance which can help small business owners cover claims they may not have expected.

To learn more about the cost involved to protect your business, keep reading our article below.

How much coverage is enough?

This is the first question asked by business owners who are new to the insurance market. Because more coverage means higher annual fees, businesses want to opt for just the right amount of coverage so their premiums stay low but they don’t have any gaps in the event a claim is filed.

Most organizations opt for $500,000 to $1,000,000 in general liability insurance coverage. This level of coverage tends to be plenty for most companies, but higher risk industries usually want to obtain more coverage.

What Does General Liability Insurance Cover?

Before getting into a conversation about what different levels of insurance might look like for your specific business (and what will influence the cost), let’s first take a look into what general liability insurance actually is.

General liability insurance covers a wide range of problems that could come up while operating your business, such as:

  • Bodily injury of employees or non-employees while business practices are being performed
  • Property damage of the business location or customer property as a result of rendering professional services
  • Personal injury resulting in damaged reputation such as slander, libel, or other defamatory outcomes
  • Legal defense in the event of a lawsuit to cover legal and court fees

When You Need Extra Coverage

Depending on your business, some types of coverage are more important than others. A construction business, for example, benefits from coverage geared toward bodily injury in the event of an employee or visitor injures themselves at the worksite. A law firm might want extra coverage relating to potential claims of legal malpractice.

In cases like these where more specific coverage is needed, business owners can add professional liability insurance or workers compensation to bolster their general liability insurance– this ensures that you are covered for an even wider variety of claims. (You can learn more about these and more in our article on types of business insurance.)

How much does general liability insurance cost?

The cost of general liability insurance varies greatly from hundreds per year to thousands. Many factors play into the pricing of premiums, including the size of the company and the different levels of coverage your business needs.

Here, we will discuss what is covered by general liability insurance, the factors that affect the cost of coverage, as well as the amount of coverage that is available.

How are premiums calculated?

A lot of different factors go into the calculation of insurance rates. When trying to determine ways in which your business might be able to lower their rates, there are a few main factors to take into consideration.

The Number of Employees

As a general rule, the larger your company, the higher your insurance premium. This is because there are more people to ensure and more possibilities for something to go wrong.

Your Product or Service 

As stated before, the higher-risk your product or service is, the more likely you are going to have a higher premium. This is because when you are in a high-risk industry, there is a greater chance for something to break, become damaged, or for an injury to occur.

Years In Business

Generally speaking, the longer your business has been open, the lower premium you will pay. This is because over time, you will be able to show proof that your business is well run with minimal claims or mishaps.

Past Claim History

Insurance companies want to assess the risk involved in your business operations to estimate whether you will be a costly establishment to ensure and defend in the long run. As such, the fewer claims filed, the lower your premium. The more claims filed, the higher.

How Much Will My Coverage Cost?

Coverage costs range widely, with some reports stating that annual cost ranges between $483 and $2,758. These reports also state, however, that the median cost is between $425 and $921.

While these numbers are very general, they can give a sense of how much insurance would cost for a business.

Considering all the different factors that go into calculating premiums, it is best to speak directly with an insurance agent to find the exact rates. Business owners who go to multiple insurance carriers and ask for (or even get an online) quote, helping them find the best combination of cost and service that fits their needs. Sometimes these quotes can even be used as a bargaining tool for obtaining a better rate or better coverage package from a given carrier.

Final Thoughts

General liability insurance is very important for any business to hold. Some states even require it by law. While coverage is sometimes costly, it can be well worth it if a company finds itself on the wrong side of a lawsuit or with injured employees.

At the Gebhardt Insurance Group, we offer a variety of coverage from a host of major insurance carriers with an experienced staff that can help you determine the right coverage for your business. Give us at call at 520-836-3244 to get a quote and make an appointment to take the final steps in insuring your business.

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Steve Gebhardt

Gebhardt Insurance Group was honored by AAA Insurance for being the top New Policy Agency in Arizona for 2013 and achieving the "Emerald Achievement Award."
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