Mishaps happen. And when you’re a business owner, people have a tendency to think those accidents are all your mistake. Maybe they are — and perhaps they are not! Either way, a general liability insurance plan can offer protection for your business when accidents lead to lawsuits.
When small businesses are sued for losses in the wake of an accident, the financial effect can be tragic. In many cases, a business may never recoup from the effect. General liability insurance shields your assets in the case of a lawsuit due to accidents or injury and can give peace of mind to small business owners.
The article will explore basic facts about general liability insurance for small businesses, how much general liability for businesses cost, how can a person get cheap general liability insurance, and more.
Table of Contents
- 1 What is General Liability Insurance?
- 2 How much is the Cheapest Liability Insurance?
- 3 General Liability Insurance for Contractors
- 4 Best General Liability Insurance for Small Business
- 4.1 Best Overall: State Farm
- 4.2 Best for Independent Contractors: Hiscox
- 4.3 Best General Liability Insurance: Nationwide
- 4.4 Best Workers’ Compensation: The Hartford
- 4.5 Best Commercial Property Insurance: Travelers
- 4.6 Best Business Owners Policy: Liberty Mutual
- 4.7 Best Commercial Auto: Progressive Commercial
What is General Liability Insurance?
General Liability (GL) insurance, occasionally called small business liability insurance or commercial liability insurance, provides insurance coverage for your business against claims made by others including bodily injury, harm to property, or personal injury.
If someone comes to your place of business and is wounded, a general liability policy could cover their medical expenses. If someone else’s property is harmed and you are discovered to be accountable, the repair or replacement cost could be covered. And if someone’s reputation is harmed by something you or an employee said or wrote about them, the associated expenses could be covered.
Why do I Need General Liability Insurance?
As a small business owner, you may be legally liable if another person gets injured or if their property is harmed while at your business or because of something you did. Make sure your business is appropriately secured against risks.
You should take into consideration general liability insurance coverage if you or your employees:
- Communicate with clients face to face
- If you visit a client’s place of work, or clients visit yours, there is always the likelihood someone could get hurt and need medical treatment.
- Have access to customer’s property
- If a customer’s property is harmed at your location or at a job site, general liability insurance could cover the expense to fix or replace it.
- Use advertising to market your company
If you promote your company and inadvertently use wording that is under copyright or trademark, general liability insurance could cover you if a claim arises.
How much is the Cheapest Liability Insurance?
|Most Common Claims||Percent of Business Owners With Claim||Average Claim Cost|
|Customer Slip & Fall||10%||$20,000|
|Customer Injury & Damage||10%||$30,000|
According to The Hartford’s data, the average cost of a general liability claim increases to $75,000 when a lawsuit is there—and that doesn’t consider the cost of time spent away from your business. Even a small claim can cost from $2,000 to $5,000 in settlement or defense bills, whether the claim is genuine or trivial. Without general liability insurance, these expenses fall on your shoulders.
This doesn’t mean you shouldn’t seek low-cost coverage. You want to make certain your policy does what it’s supposed to do, such as cover the risks you’re most likely to encounter. The best method to do this is to compare offers from top-rated general liability carriers. That way, you can have confidence that your claims will be paid promptly without interrupting your operations.
While you don’t want cheap general liability insurance that leaves your business unprotected, you do want the cheapest policy you can find that still offers all the coverage you need. You can get the cheapest general liability insurance by:
- Exploring around: Every insurance carrier has a desire or a type of risk it’s most inclined to insure. Usually, a carrier can offer cheaper general liability to businesses that fall within its craving, so seek to get at least three or four quotes before you purchase.
- Evaluating coverage: General liability arrives with two limits: an aggregate, or the sum your insurer pays for all claims during the policy term, and a per-occurrence, of the amount it pays for any single claim. Higher coverage limits cost more, so you want to select an amount that shields against risk without over-insuring. The most common limits for small businesses are $1 million per occurrence and $2 million aggregate.
- Correctly estimating revenue: Insurance applications almost always enquire about your revenue, in part because more revenue can suggest more risk. This entails you want to give as truthful information as possible to reduce the likelihood of being overcharged.
- Bundling policies: Many carriers offer discounts when you buy several policies because it increases the possibility of you staying with them when it’s time to renew. Most also have a BOP that’s meant explicitly to make the property and general liability insurance cheaper for small businesses.
- Paying in full: Some carriers offer a discount when business owners pay in full at policy beginning. Others may charge an extra fee for distributing out premium payments.
- Controlling risks: Your claims history is one of the elements insurers take into account when establishing your premium. Taking measures to decrease your chances of filing claims can have a favorable impact on your premium.
It is common to think that no insurance company is ready to go with you if there is a business risk. The insurance company will also offer you insurance coverage, but the rate should be sky-high. Thus, you may work for the area where there are possible risk factors and eradicate those risks to get the cheapest liability insurance for small business. More significantly, discounts are available and simple to obtain if your business is so secure. Nevertheless, there are areas where you can improve if you have a small business.
Keep your business in compliance with a code of conduct
Every business no matter whether small or medium has a code of conduct, which implies having a good practice of business legally. It suggests that there is local law and you have to go along with it. If you follow the community rules and regulations, pay taxes on time, obey the law, your business will secure a reputation from the side of the government and people of the community.
More crucially, you may attain any credentials and certificates for operating a good business. Hence, more reputation justifies fewer business risks. Though the insurance company will go for that business organization which is considered as a good business from the side of government and the general, they will offer you the cheapest rate of general liability insurance.
Update your business with safety features
Insurance will be high when you are operating a risky business. For instance, you have a food store where there are no safety aspects. Typically food store is a delicate store where any thief or any troublemaker may enter and mix poison with foods to ruin the reputation of the business. Nevertheless, if you have robust safety features like installing security cameras and alarms, it implies you are more vigilant to establish your business in a stronger and sustainable way. This can spare you from any unnecessary accident in your business.
The insurance company is certainly going with you when your business is protected from any troublemakers. They will offer you some exciting benefits and discounts to resume and expand your business in the long run.
Supervise safety as precautionary practice
You have a business in an apartment where many customers visit every day for their reasons. You need to make sure how to secure the apartment where you are operating your business is. A customer may slip due to spills on the floor and he may endure back pain, shoulder injury, or neck injury which can prove to be costly in case they claim against you. Not spills to be cleaned but there may also be a stumbling block on the walkways, the walkways may be full of litter which may result in accidents for your customers.
As part of safety, you need to make your business area secure and clean so that any unforeseen accident does not occur. Still, most insurance companies may inspect the business area to make sure it is safe and sound. If there is enough safety in the business area, the insurance company will feel that it is also safe to invest in you. Moreover, they will offer exciting discounts that can be a good deal indeed.
Renovate your building to increase safety
The building where you are operating your business can be risky. It is also risky for the insurance company if there is a likelihood of an accident due to your risky building. The insurance company will pay a visit to your business area and draft a report on the status of safety. However, they will offer a cheaper rate of general liability insurance for safety and security in your business area. As part of the renovation work, you may install handrails on the stairs, add enough lighting system to the dark areas, get rid of something that causes risk.
General Liability Insurance for Contractors
General liability insurance is the finest choice for general contractors to cover your business, your assets, and yourself, at a reasonable cost.
Getting contractors, the best general liability insurance policy at a low-cost is a specialty at Contractors Liability. We encourage all general contractors to have, at a minimum, a general liability insurance policy when forming their contracting business.
In most states, general contractors are obliged to carry general liability insurance in order to pull a permit or enroll as a general contractor.
Many clients will not permit you to start work without a policy, particularly on larger projects. These policies also offer you safety from losses if an industrial accident should occur; do not take the risk of not having insurance.
You can make contact with an agent at Contractors Liability to get a policy that is explicitly devised to safeguard your business. General liability insurance is the top choice for all general contractors, and Contractors Liability can assist you to get a plan that is suitable for you according to your needs.
Best General Liability Insurance for Small Business
Best Overall: State Farm
State Farm is considered as the best overall small business insurance company because it offers various types of coverage through a nationwide group of agents. Above all, State Farm agents are business owners themselves, so they comprehend the needs of other small business owners.
Though best recognized for auto and home insurance, State Farm has more than 100 products as well as financial services, banking, and commercial insurance. It enjoys an A++ rating for financial stability from AM Best.
State Farm sells insurance in every state and offers policies designed for each stage of a company’s growth cycle including general liability, professional liability, and other kinds of coverage that can be combined onto policies to fit individual needs. State Farm also offers business insurance that is devised exclusively for certain industries such as contractors, professional services, restaurants, and retailers.
However, some of the drawbacks are that customer service won’t be reliable with every agent. Also, many agents can’t write across state lines
Best for Independent Contractors: Hiscox
Hiscox wins the top spot for independent contractors because they have products priced especially for companies with fewer than five employees across a wide variety of industries.
Hiscox trades on the London Stock Exchange but conducts business in 13 countries and all 50 states, plus the District of Columbia.
Hiscox offers the main lineup of business insurance products including commercial general liability, professional liability, business owners’ policies (BOPs), workers’ compensation, cyber liability, commercial auto, and employment practices liability insurance (EPLI). Moreover, the company also writes all the business insurance policies sold by GEICO.
Hiscox presents standard liability coverage limits up to $2 million, but higher limits are available upon underwriting approval. The company features coverage for many industries and policy types for as little as $22.50 a month, making it a cheap solution for independent contractors and small businesses. Tailored solutions are available for 14 different industries including salons, gyms, consultants, therapists, janitors, and acupuncturists.
Some of the downsides of Hiscox are that it doesn’t have local agents and it is not a U.S.-based company
Best General Liability Insurance: Nationwide
Nationwide is deemed as one of the best general liability insurance because the company is a business insurance carrier that concentrates on simple, direct insurance solutions, which is best for businesses with high-risk, general liability requirements. Nationwide also got the highest score in the J.D. Power Small Commercial Insurance Study of customers’ satisfaction in both 2018 and 2019.
Apart from general liability Nationwide offers many kinds of business insurance including business property, commercial auto, BOP, workers’ compensation, EPLI, equipment breakdown coverage, and umbrella insurance. The company also comprises 14 different industry areas including retailers, medical clinics, professional service providers, and agricultural businesses.
Even though Nationwide offers a wide variety of products, we like its separate general liability policy that covers for a minimum of $1 million per occurrence and $2 million in aggregate annual coverage for industries at higher risk for third-party claims, such as retail providers, professional offices, and food and beverage businesses.
Some cons of Nationwide are that coverage not offered in Alaska or Hawaii. Also, over 240 customer grievances through BBB.
Best Workers’ Compensation: The Hartford
Harford is seen as top workers’ compensation provider because of the special advantages it offers employers such as pay-as-you-go plans. These plans significantly lower the chances of over-or under-paying premiums because costs are dependent on actual payroll instead of estimates.
The Hartford, a Connecticut-based company, enjoys an A+ (Superior) rating from AM Best.
Hartford offers many kinds of business insurance including general liability, BOPs, commercial auto, commercial flood, data breach coverage, EPLI, marine insurance, and professional liability coverage. The company also promotes more than 20 industry specialties including arborists, pet groomers, restaurants, printing, and publishing.
Furthermore, the Harford offers many other policyholder advantages including:
- Access to The Hartford’s Preferred Medical Provider Network with over a million healthcare providers
- Prescription drug features
- Reimbursements for all lab work
- The Nursed Back to Health Program
The cost of workers’ compensation from The Hartford is computed per $100 of payroll and depends on codes that are utilized to categorize employees’ daily roles. Nevertheless, The Hartford also extends discounts to workers’ compensation insurance: up to 5% for policyholders who bundle their coverage with general liability and up to 10% for bundling workers’ comp with a business owners policy. These attributes are clearly useful for The Hartford’s customers, as the company is the second-largest provider of workers’ comp insurance nationwide.
Some of the drawbacks include no app for filing claims and exhausting application procedures.
Best Commercial Property Insurance: Travelers
Travelers is considered as best commercial property insurer because the company has established vast experience in the space, having been rated the top commercial property insurance company in the United States.
Travelers has insurance solutions that are devised to fulfill the needs of companies in more than 20 industries including transportation, manufacturing, construction, retail, and public entities.
The company offers other kinds of business insurance including commercial auto, cyber liability, surety bonds, and workers’ comp, although prices differ by industry.
Because Travelers conducts business in the U.S., Canada, Mexico, and the U.K., the company is best to offer coverage for companies that do business internationally. Although, while Travelers has an A+ rating from the BBB, the company also has almost 400 enrolled customer complaints, so business owners should be vigilant to examine policy documents before purchasing coverage from one of Travelers’ independent agents across the country.
Best Business Owners Policy: Liberty Mutual
Liberty Mutual is deemed as the best insurer for BOPs because the company has a quick and simple procedure with an efficient business owner’s policy available for many different industries that merge coverage in one cost-effective policy.
Liberty Mutual also advertises 24-hour claims support through its nationwide contractor referral network. The company is well known for having adjusters around the country that can assist to settle claims promptly, even in rural communities. Liberty has been recognized by the BBB since 1931 and has an A+ rating.
Liberty Mutual offers business insurance in all 50 states that are sold through independent agents across the country. The company has numerous types of coverage available including commercial auto, equipment breakdown, inland marine, umbrella coverage, and workers’ compensation, as well as nearly 20 industry-specific solutions including agriculture, construction, education, healthcare, hospitality, and real estate.
Best Commercial Auto: Progressive Commercial
Progressive is considered the best insurer for commercial auto insurance because it is the largest specialist in this area and understands how to manage business auto claims better than anyone.
Whereas commercial auto is one of Progressive’s major areas of emphasis, the company also offers other kinds of business insurance including general liability, workers’ compensation, BOPs, professional liability, and cyber insurance. Progressive has specially created insurance solutions for 10 industries including beauty, health and wellness, professional firms, and skilled trades.
Progressive offers up to a 15% discount on commercial auto coverage when it’s pooled with general liability or a BOP, even if the general liability or business owner’s policy is through a different carrier. Business owners can also save up to 15% for paying annual premiums in full upfront. Note that discounts are not offered in all countries.
Insurance is an extremely crucial issue in our life. It is also more essential In terms of business where there is much more risk which can turn a businessman’s’ life into a fiasco. But insurance won’t allow that to happen because the insurance company will cover the damage encountered by a small businessman. Therefore, general liability insurance is very critical for the small business and the people having a small business won’t have to cope with any danger for business loss due to any claim by the third party.