Typically, small business owners pay a few hundred to a thousand dollars annually for $1 million of general liability coverage. However, this cost varies across businesses based on a number of factors.
A $1 million general liability insurance policy means your insurance company will provide financial protection for your business up to $1 million in covered losses or damages. Beyond that $1 million limit, you'll have to pay for costs out of pocket without the help of your insurer.
An important note is that a $1 million policy in commercial general liability coverage isn’t right for every business. Some need more, like a $2 million liability policy. And some want less, such as $300k or $500k liability insurance coverage. It all depends on what your business needs. Lawsuits can prove extremely costly, which is why many business owners choose higher limits.
You'll want to choose coverage limits that'll cover a potential lawsuit, without buying more than needed.
One of the most popular options for small businesses—and one that 90% of Insureon customers choose—is a general liability insurance policy with $1 million / $2 million limits. This includes:
On average, Insureon customers pay $42 per month, or about $500 annually, for a $1 million general liability insurance policy. Additionally, 29% pay less than $30 per month, and 40% pay between $30 and $60 per month. Customers who need more coverage will likely pay a higher premium.
When purchasing a policy, the deductible should be something you can easily afford. If you're unable to pay for it in a crisis, then your insurance won’t activate to cover your liability claim. The average deductible that Insureon customers choose for general liability insurance is $500.
When it comes to business liability insurance, there are several factors that contribute to your annual premium. To determine your insurance premium, insurance carriers will look at your:
The price of your insurance coverage is influenced by the size of your business location. Larger premises mean more places where third-party injuries or property damage can happen, especially if your building is open to the public, which could raise your premium.
In most cases, the industry in which your business operates has the biggest impact on your premium. Insurance providers consider any risks that might increase the possibility of an expensive claim. The greater the risk, the higher the price you’ll pay.
Generally, the higher your annual revenue, the higher your premium. However, this associated cost increase is also dependent on your business industry. Some industries only increase slightly with an increase of sales, while others experience hefty hikes in price due to a surge in risky activity.
General liability insurance is not usually required by law, but business owners should be aware of situations when a licensing body, a client, or a lessor might require this common type of coverage.
The more employees you have—including full-time, part-time, contractors, and consultants—the greater chance for an accident to occur. That's why your premium will typically be higher if you have more employees.
While state laws play a role in the different types of coverage you are required to carry, the area in which your business is located can affect how much you pay for a policy.
Businesses in high-crime areas or those that receive a large amount of foot traffic will have to carry more coverage than businesses in low-crime areas or have little-to-no foot traffic.
Carriers will look at your previous claims history, if you have one, to determine how risky your business is. The longer your claims history is, the riskier your business will be perceived by the insurance provider. This ultimately will impact your insurance cost in some capacity.
While all of the above factors play a significant role in how your insurance rate is calculated, there are some other factors insurance companies will consider, including:
Your small business’ cost of insurance depends on may key components, and depending on these factors it can be pricey. A more cost-friendly way to purchase insurance is to bundle the policies your business is required or chooses to carry.
One way to save money on your commercial general liability insurance is to purchase a business owner’s policy (BOP), which combines general liability coverage with commercial property insurance under one policy. On average, the cost of a BOP is only $57 per month for Insureon’s customers.
Another bundle small business owners can purchase is a commercial package policy (CPP), which bundles general liability and commercial property. It also allows for more coverage options and higher policy limits, making it a good choice for businesses in higher risk industries who aren't eligible for a BOP.
Small business owners may also find these policies helpful in protecting their businesses:
While general liability is predominantly offered with up to $2 million per-occurrence limits and up to $4 million aggregate limits, a commercial umbrella insurance policy can help provide additional liability coverage for more expensive claims.
In addition, umbrella liability insurance can also provide additional coverage limits for commercial auto insurance or an employer’s liability policy.
Some businesses may be required to carry higher limits based on the amount of risk involved with their industry. For example, those in the Allied Health space, such as nurses or chiropractors, may be contractually required to carry a general liability policy with aggregate coverage limits up to $6 million.
Because few carriers will offer a standard general liability policy with this amount of coverage, the most simple way to achieve this is by purchasing a commercial umbrella insurance policy. Commercial umbrella insurance costs on average about $75 per month for each $1 million of additional coverage needed.
Therefore, if your business is looking to obtain per-occurrence liability coverage for $5 million, a cost-effective solution would be to purchase a general liability policy with $2 million per-occurrence limit, and then a $3M umbrella liability policy.
While many factors affect the cost of general liability insurance, with several outside your control, there are ways to find affordable small business insurance. To get free quotes, fill out Insureon’s easy online application with basic information about your business, such as revenue and number of employees.
You can consult with a licensed insurance agent at any point in the process. Once you pay for your policy, you can download a certificate of insurance (COI) to show clients and others that your business is protected.