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General Liability Insurance Policy

How Much Does General Liability Insurance Cost A Business?

General liability insurance is crucial for protecting your business against bodily injury or property damage claims. Such eventualities can arise during regular business operations. Businesses that find general liability insurance policy useful include:

  • Small business owners
  • IT contractors
  • Landscaping companies
  • Consultants
  • Real estate agents
  • Janitorial services
  • Marketing firms
  • Artisan contractors

Without general liability insurance, you would have to fully pay for damages on your own. This article will delve into the details regarding the cost and coverage of general liability insurance.

Business Liability Insurance Policy Coverage

A general liability insurance policy typically covers the following aspects:

Third-Party Bodily Injury

This comes into play if a customer sustains an injury after falling or slipping in your business premises. As a result, they may file a lawsuit against your company. A general liability insurance policy can cover the medical bills as well as the legal expenses for your business.

Third-Party Property Damage

If your employees work at a customer’s place, there is a chance that they may accidentally cause property damage. This coverage can cover the repair and replacement costs if any of your staff members damage a client’s belongings.

Reputational Harm

A third party may sue your business based on libel or slander. This may be due to something said by one of your staff members. For instance, if an employee publishes a poor review about a competitor, the other party may react by filing a lawsuit.

Advertising Injury

Your company may get sued based on copyright infringement. For instance, a photographer may file a lawsuit against your business if you accidentally use their photos in your advertisement without permission.

Add-Ons

You can choose add-ons to avail yourself of more protection. Choose them based on the requirements of your business. Those you can consider include:

  • Employment-related practices liability: This considers unjust invasion of privacy and termination claims made by an employee against your business.
  • Fire legal liability: This offers coverage if the business premises you have rented suffer fire damage as a result of neglect.
  • Umbrella policy: Coverage offered by this add-on extends beyond the limits of other liability coverage. It safeguards your business against major losses. The policy comes into play when your business has already utilized underlying liability coverage.
  • Directors and officers liability: You can avail of this policy if the board of directors of your company makes a bad decision that results in a damages claim.
  • Liquor liability: This safeguards your business against injury claims that arise from serving or selling alcohol during business hours. The policy is generally tailored for restaurants or bars.
  • Product and completed operations liability: This offers protection against property damage and bodily injury claims that arise away from your business premises but are a result of your work or products. The level of risk you face and the amount of coverage you require depend on your business type.

What is Not Covered by General Liability Insurance?

The general liability insurance policy is rather comprehensive. However, there are certain aspects it does not cover. For instance,

 

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  • Injuries sustained and illnesses contracted by employees at work. This is typically taken care of by a workers’ compensation insurance policy.
  • Harm to your own business property.
  • Errors in the professional services of your business. This is usually covered by professional liability insurance.
  • Vehicles owned by your company. A commercial auto insurance policy generally protects them.
  • Liquor liability: This takes into account the legal expenses in case of a lawsuit resulting from incidents such as vandalism, assault, and drunk driving.

How Much Does General Liability Insurance Cost?

The cost of general liability insurance is usually between $300 and $1,000 annually. Businesses have different needs and are exposed to different types of risks. Factors that have an impact on the premiums of your business include:

Industry

Some businesses are exposed to higher risks than others. The level of risk you face depends on the type of industry your business is operating in.

For example, a retail store with several storefronts is more likely to face slip-and-fall claims than a web developer working from home. Similarly, there is a higher chance of property damage claims in a home cleaning business than in an art gallery.

Claims History

The claims history of your business is a significant factor affecting the price of general liability insurance for your business. If your business has faced lawsuits multiple times in recent years and you have used insurance claims for coverage, your insurance provider may view your business as high-risk. As a result, they may charge higher premiums.

Business Size

Each employee who works for your business carries a certain amount of risk. For example, the more drivers hired by a delivery service, the higher the chances of a car crash. As your business expands, your general liability insurance policy is likely to become more expensive.

Deductible

This is the amount you pay as a policyholder before your insurance provider offers compensation. Policies that have a higher deductible tend to cost less. However, you are required to pay that amount before you can avail of a claim.

Other factors that may affect the cost of general liability insurance include business location, yearly payroll amount, and an aggregate insurance policy limit.

Benefits of General Liability Insurance Policy

General liability insurance is vital to safeguard your business against significant financial losses. Here are some of the main advantages of this insurance policy:

Protection Against Unexpected Events

In case of unforeseen events, a general liability insurance policy may offer substantial financial compensation.

Although you may have tried your best to keep your business operations smooth, the chances of an accident are always there. If your business carries a general liability policy, you can stay assured that you will be financially protected if an unexpected event takes place.

Gaining More Contracts

A sound general liability insurance policy can facilitate the growth of your small business by helping you secure more contracts. Many firms check whether other businesses have general liability coverage before agreeing to work with them. This insurance policy will make it easy for your business to increase revenue by collaborating with other businesses.

Trust Building

A general liability insurance policy assures others in the industry that your business is here to stay. An insurance policy enhances trust and fortifies the reputation of your company. If a customer is satisfied with your products and services, they may recommend your brand more frequently.

Protection Against Injury Claims

General liability insurance is vital if you tend to meet your clients in person. An injury claim can occur without warning whether you meet clients at their home or within your business premises. With a general liability policy, you don’t have to think about incurring heavy costs associated with bodily injury claims out of your own pocket.

Safeguard Against Staff Actions

Although you may have hired top-notch employees, staff actions can sometimes put your business at risk. If a staff member is suspected of libel or slander, a third party can sue your business. Your general liability insurance policy may take care of the legal expenses arising from such a lawsuit.

Risks of Not Having General Liability Insurance

Without a general liability insurance policy, your company risks facing settlements, judgments, and legal expenses. This can be costly and even become a cause of bankruptcy. The price of legal counsel can be higher than $100 per hour.

Not carrying a general liability insurance policy can make your business vulnerable to serious financial risks for different types of liability claims. Moreover, you can lose customers if they refuse to do business with you on the basis of not carrying a general liability insurance policy.

General Liability Insurance FAQs

Here are answers to some of the frequently asked questions about general liability insurance policy:

Is general liability insurance a legal requirement for businesses?

You are not legally bound to carry a general liability insurance policy. Nevertheless, many companies that you may choose to do business with may require you to have this policy.

In other words, you may require this insurance policy if you wish to sign a client contract or commercial lease. Applying for some professional licenses also requires showing proof of general liability coverage.

Do independent contractors need general liability insurance?

General liability insurance comes into play when a third party, such as a customer, holds you responsible for property damage or bodily injury. Your customers may prefer for you to have this coverage before signing a contract with you.

In particular industries, such as construction, independent contractors are also required to carry a general liability insurance policy. Even if it is not a requirement, you may want to purchase it as an independent contractor to avail of financial coverage in case of common lawsuits.

Click here to know about the benefits of insurance for general contractors.

What protection does general liability insurance offer against social media risks?

General liability insurance typically includes advertising injury coverage. It offers protection against slander, libel, invasion of privacy, and brand or copyright infringement lawsuits.

For instance, your business is accused of publishing something negative related to a competitor on social media, resulting in the other party filing a lawsuit against your business. If your business is carrying general liability insurance, your legal expenses would be covered in this case.

Is general liability insurance costly?

The cost of general liability insurance differs for every business. It varies based on the different factors that are dealt with by the insurer and the insured. Factors include business size, location, industry, and more.

It is best to shop around for rates and do a thorough comparison to figure out the most cost-effective coverage. For instance, a fire in your business premises ends up injuring a visitor who was there to see a colleague. Being the insured, you can use the general liability insurance policy to defend your company against expensive lawsuits.

Is general liability insurance the same as professional liability insurance?

While both insurance policies aim to protect your business against lawsuits by third parties, they are not the same. To protect your business well, you would require both policies.

While general liability insurance shields your business against property damage and bodily injury claims, on the other hand, a professional liability insurance policy protects your business against claims of negligence.

Is cyber liability included in general liability insurance coverage?

Cyber liability insurance and general liability insurance are separate policies. Businesses that need coverage for a data breach can get the clause added to their professional liability policy.


Final Word

No matter how hard you try to ensure smooth business operations, there is always a chance of an unforeseen incident. In some cases, an unexpected event could end up costing you a large amount. In order to avoid paying for a major loss out of your own pocket, it is best to carry the right types of insurance coverage.

General liability insurance is essential to safeguard your business against lawsuits that arise due to bodily injury or property damage claims. It provides coverage against common risks that your business is exposed to when interacting with people outside your company.

AC Insurance has been providing top-quality business insurance policies since 1991. Click here to get a free quote today!


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