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General Liability Insurance Cost: Smart Strategies and Budgeting for Success

Editor: Benjamin Knox | Updated: Sunday, February 18th, 2024

Running a business means you have a lot to think about, and one really important thing is General Liability Insurance (GLI). It helps protect you from problems that might happen during normal business stuff, like someone getting hurt or something getting damaged.

Your business deals with people all the time—customers, clients, the public. Now imagine if something goes wrong on your property or because of what your business does. Without General Liability Insurance, you could end up with a big financial mess. Every year, lots of small businesses have to deal with lawsuits.

Even a small mistake can turn into a big problem. Like if someone slips and falls at your place, you could be stuck paying for their medical bills and legal fees. But with General Liability Insurance, it covers these costs, so you don't have to stress about your business going broke because of legal stuff.

And if your business makes or sells products, there's always a chance something could go wrong. If a product hurts someone or damages something, you could be in trouble. But with insurance, it takes care of the costs, so you can focus on running your business without worrying about legal stuff.

How Much Does General Liability Insurance Cost?

The cost of general liability insurance is something many small business owners wonder about. According to a study by Hiscox, it's typically around $30 a month. Interestingly, almost all business owners, about 95%, pay less than $50 a month. Very few, only 1%, pay more than $100.

However, The Hartford suggests a slightly different average. They say it's about $805 a year or around $67 a month. [1] On the other hand, Insureon reports that their customers pay about $42 a month on average. [2]

After comparing prices from different websites, it seems the average cost for small businesses falls between $40 and $55 per month, which adds up to $480 to $660 per year. So, it's wise to shop around and compare quotes to find the best deal for your business.

How Much General Liability Insurance Do I Need?

Protecting your business with general liability insurance is important. But how much do you need? Here's a simple guide:

  • Know Your Company's Size: Think about how big your business is. More employees mean more risks. So, if your team is growing, you'll need more coverage.
  • Consider Your Industry: Different jobs have different risks. If your work involves risky tasks like tree removal or roofing, you'll need extra coverage.
  • Check State Requirements: Each state has its own rules for insurance. Make sure you know what your state needs from businesses like yours. Following these rules keeps you safe and legal.
  • Think About Your Projects: Some projects are riskier than others. If you're taking on big projects or working with the government, you'll need more coverage.

What Does General Liability Insurance Cover?

In the day-to-day running of a business, unexpected things can happen. That's why having general liability insurance is important. It helps protect your business from various types of claims. Here's what it typically covers:

  • Bodily Injury: This part of the insurance helps if someone gets hurt because of your business. For example, if a customer slips and falls in your store, this insurance can help pay for their medical bills.
  • Property Damage: Accidents happen, and if your business accidentally damages someone's property, this insurance can help. Whether it's a broken window at a client's house or something similar, it can cover the costs to fix or replace it.
  • Personal Injury: If someone sues your business for things like saying something bad about them (like spreading lies), this insurance can cover your legal costs.

What Doesn’t Liability Insurance Cover?

Liability insurance helps keep your business safe, but it doesn't cover everything. Here are some situations where you might need more than just basic liability insurance:

  • Employee Injuries: If one of your employees gets hurt while working or gets sick because of their job, regular liability insurance won't help. You'll need workers' compensation insurance for that.
  • Mistakes in Professional Services: If a customer sues your business because they think you made a mistake in the services you provided, regular liability insurance won't cover it. You'll need professional liability insurance to help with legal costs.
  • Accidents with Company Vehicles: If there's an accident involving a vehicle owned by your company while it's being used for business purposes, regular liability insurance won't pay for damages. You'll need commercial auto insurance for that.
  • Fire Damage: If something like a fire damages a building your business owns, regular liability insurance won't pay for repairs. You'll need commercial property insurance to help with that.

Factors Influencing How Much General Liability Insurance Costs

Insurance companies look at several things when figuring out how much your liability insurance will cost:

  • Risk Exposure: If your business is in a risky industry, you might pay more for insurance.
  • Business Location: Being in a busy area could mean more claims, which might raise your insurance bill.
  • Years in Business: Newer businesses often pay more because they haven't proved they're safe yet.
  • Type of Business: Some industries are riskier than others, so they might have higher insurance costs.
  • Coverage Limits: How much coverage you choose, and your deductible can change how much you pay.
  • Claims History: If you haven't had many claims, your rates might be lower because you're seen as safe and experienced.

To get an idea of how much your insurance will cost, it's best to ask for a quote that fits your business. You can also check out what other customers say in reviews.

How Does General Liability Insurance Work?

General Liability Insurance isn't just a legal thing—it's a smart move that protects your money and makes people trust your business more. Here's how it works:

  • Protecting Your Money: Imagine someone gets hurt in your store. Without General Liability Insurance, you could end up paying a lot for their medical bills and legal fees. But with this insurance, those costs are covered, so your money stays safe.
  • Following the Rules: Many states say businesses must have some kind of liability insurance. Having it shows you're serious about doing things right, which makes customers and partners trust you more.
  • Building Trust: Did you know? When people see you have General Liability Insurance, they're more likely to trust your business. Being ready for accidents makes you stand out from other businesses and makes customers more likely to choose you.

What Is A General Liability Certificate And Why Do I Need It?

In business, having a General Liability Certificate (COI) is really important. It's like having a badge that shows you're protected. Let's see why COIs matter:

  • Easy Proof of Coverage: Your COI is like a summary of your insurance. It quickly shows others that you're insured, without confusing them with lots of details.
  • Quick Access to Info: Instead of digging through long insurance documents, the COI gives you the important stuff fast. Whether you're hiring or someone needs your insurance details, it's right there.
  • Protects Your Wallet: If something unexpected happens and your business gets a claim, having COIs from your vendors and subcontractors helps financially. It's like having extra backup.
  • Shows You're Professional: In business, being professional is key. Having a COI proves you're serious and reliable, which can make a big difference in how others see you.

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