Commercial general liability (CGL) insurance, protects businesses from financial losses due to third-party bodily injury, property damage, and personal advertising and reputational harm claims. A small business owner with a yearly revenue of around $200,000 can generally expect to pay $170 to $13,000 annually. The wide range reflects the inherent risks of the industry.
A great way to find affordable general liability quickly is through a broker like Simply Business, which specializes in offering CGL to small businesses. In 10 minutes or less, you can get free, no-obligation quotes from multiple providers, and after comparing the coverage and price, you can purchase a policy online without needing to speak with anyone.
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General Liability Insurance Cost by Profession
All of these estimated costs are for the same level of coverage: $1 million per occurrence and $2 million aggregate.
Profession | Estimated Annual Premium |
|---|---|
Swim Instructor | $170 to $400 |
DJ & Videographer | $190 to $740 |
Photographer | $200 to $800 |
Food Vendor | $350 to $1,000 |
Electrician | $500 to $1,200 |
Janitorial Services | $500 to $4,500 |
Handyperson | $575 to $2,300 |
Landscaper | $900 to $2,000 |
Painter | $2,700 to $7,700 |
Heating, ventilation, and air conditioning (HVAC) Technician | $9,000 to $13,000 |
Factors That Impact Costs
When determining a premium, providers consider many factors. These include:
- Location: The geographic region of a business factors into the cost of premium because weather and local laws can impact the price of a claim. For example, a business in Florida can expect to pay a higher premium because of the risk of a hurricane.
- Hours of operation: If your business is a 24/7 gym or only open on weekdays or if you have a bar that is open late into the night, the premium will reflect those hours of operation.
- Claims history: If your business has had a loss in the last three to five years, expect to have a higher premium cost or even run into companies that will not offer a quote.
- Revenue: Higher revenue usually means more business, which translates into greater risk exposure for the provider.
- Employees: How many employees perform the work and are properly trained? The more employees your business has, the more interaction with customers and the greater the potential for claims.
- Industry: A cleaning company that services an airport or a school should expect to pay more than a private, residential cleaning service.
- Inherent risk: A carpenter who installs wood-burning fireplaces vs one who installs kitchen cabinets will likely have a higher premium.
- Limits: Raising or lowering the limits will impact the premium. While this cost is usually negligible, it is worth considering whether you need a limit of $4 million or $300,000.
While it can be tempting to omit facts when getting a quote, it is important to answer every question truthfully so that the provider can give you an accurate quote. Being honest when applying for insurance can be the difference between having appropriate coverage or having a claim denied because you misrepresented your business when applying.
General Liability Insurance Coverage
As its name implies, general liability is broad liability coverage designed to cover a wide variety of different losses a business may face. These are as follows:
- Property damage: Incidents leading to property damage for third parties (customers, patrons, or bystanders) are covered by the general liability policy. This could be on-premises or off-premises during business operations.
- Bodily injury: This coverage protects your business from a claim that a third party was injured from a negligent act or liability from your business operation. This can help with medical expenses and settlements.
Keep in mind: Property damage and bodily injury draw on the same aggregate limit of the CGL policy.
- Personal advertising injury: Personal injury is ruining someone’s reputation through libel or slander. Claims could be made based on oral comments and statements made to customers or even on social media posts. The comments can come off the cuff, such as from an employee disparaging a competitor to a customer to an advertisement attacking other businesses.
Some providers have a separate, smaller limit for personal and advertising injury, whereas others will have that draw on the overall limit. It’s best that you review your policy for the specifics.
- Hired and nonowned auto (HNOA): This is regularly offered as an endorsement for general liability. It extends your liability coverage to vehicles that are being used—but are not owned—by your business. This can include a personal, rented, or leased vehicle.
- Medical payments: If someone is physically injured on the business’ premises, regardless of negligence, the injured party is entitled to assistance with medical bills. This coverage typically has a lower limit, sometimes as low as $5,000, and is available regardless of liability.
CGL policies contain a provision for making medical payments with a separate limit. Medical payments help defray the cost of an injury regardless of whether your business is liable for the incident.
- Product liability: Available as a standalone policy or included with a CGL by some providers, product liability insurance―sometimes called products-completed operations coverage―covers harm or damage from a product your business manufactures or sells. The limit for this is usually separate from the overall aggregate limit for the policy.
- Damage to premises rented to you: Most CGL policies contain a provision for coverage of damage caused by your business to the premises you rent and occupy. The damage is usually broken down into two categories: damage by fire and all other damages. The limit for this coverage is normally $100,000.
On the whole, CGL is broken down into three sections: A, B, and C. For details on these, read our in-depth guide on what general liability covers.
What General Liability Insurance Doesn’t Cover
CGL does not cover every type of loss. Remember, it is liability coverage—meaning it covers losses to other parties and not your business property. It excludes the following:
- Commercial property: This is first-party protection for your business’ personal property (general liability doesn’t cover you if your property is damaged, vandalized, or stolen). If you need this coverage, see our list of the best commercial property insurance providers.
- Professional liability: Many businesses in the service industry, such as accounting and interior design firms, need professional liability insurance. This covers losses that come from a professional mistake, such as poor investment advice and failure to honor a contract. You may be interested in our roundup of the leading professional liability insurance companies if you’re looking to get this coverage.
- Workers’ compensation: If your employees become injured or ill because of their work, general liability will not help them or protect your business. For this, you need workers’ compensation insurance, which helps the employees with wage replacement, medical costs, and treatment.
- Employee practices liability: Employees are considered part of your business, so if an employee feels like they have been harassed or discriminated against by your business, general liability does not offer protection. For a situation like that, you will need employment practices liability insurance (EPLI).
Who Needs General Liability
Every small business owner should consider purchasing general liability insurance, a core small business policy. Also, if you rent a facility, participate in an event, or seek to be a licensed professional, CGL may be required.
These businesses, in particular, should purchase general liability:
- DJs/videographers
- Handypersons
- Contractors
- Painters
- Electricians
- HVAC technicians
- Landscapers
- Janitorial/cleaning services
- Auto body shops
- Gyms and personal trainers
- Day cares
- Beauty and hair salons
- Food trucks
- Food vendors
- Churches and other nonprofits
- Plumbers
- Retailers
- Restaurants
If you do not carry CGL and are legally liable for an incident—whether it is property damage, bodily injury, or personal injury or reputational harm—then you are 100% responsible for any of the costs involved. If the incident goes to trial, those costs would include trial fees, paying the judgment, and punitive damages.
How To Get General Liability Insurance
When purchasing general liability insurance you have several options.
- Get in touch with an insurance carrier: This is a company that underwrites a policy and assumes the risk for your business. You can contact a provider directly for a quote and to get a policy; you may want to see our top-recommended general liability insurance companies as a starting point.
- Reach out to a broker or agency: Many carriers will contract with a broker or agency to sell their insurance. The broker will work with you to help you find the best policy for your business needs—and at the best price. Also, working with a broker is one of the best ways to save money on business insurance. If you want options, then check out our roundup of the leading business insurance brokers.
- Use an insurance referral service: Similar to a broker, a referral service will consider your business needs and pair you with the best broker available.
If you’re unsure which option to go with, read our comparison of insurance broker vs carrier. We cover each’s use case and pros and cons.
How To Get Proof of General Liability Insurance
To get a certificate of liability (COI), you’ll need to contact your insurance provider and request one. Some insurance companies can generate one instantly, even giving you the ability to do so through an app. Meanwhile, others will require you to either submit a request in writing or reach out directly to your agent to have them initiate the process.
If you work in an industry where you frequently need to produce proof of insurance, you’ll want to make sure the process is quick and simple. Next Insurance is a provider that gives you the ability to instantly create and share COIs online or via its app. You can learn more about it through our review of Next Insurance.
Frequently Asked Questions (FAQs)
No, general liability is not required by law, but it is best to check with your local business authority to see if it is required for licensing. CGL is often required when a business contracts with another party. In those situations, you will need to produce a COI.
CGL offers protection from claims of negligence against your business. Areas of focus for protection are property damage, bodily injury and personal injury, and reputational harm. The insurance will work to handle associated costs, including legal fees, to resolve the claims.
No, general liability and product liability are different types of coverage. Product liability is specifically related to products your business manufactures or sells, whereas general liability refers to general business operations. However, many providers will automatically include product liability in a CGL policy.
General liability insurance costs can range from $170 to $13,000 annually. This wide range in the premium is because of the inherent risks of different industries. For example, a photographer can expect to pay $200 to $800, while an HVAC technician may have to spend up to $13,000 annually for liability.
Yes, as the LLC structure does not protect your business from a lawsuit—insurance does. The cost of investigating the merit of a claim and defense costs can become very costly. And if your business is legally liable, regardless of the structure of the company, your company will owe some sort of financial restitution to the wronged party.
Yes. While general liability is a core business policy, it is not the only one a business should consider or may be required to hold. There are lots of different types of small business insurance; for instance, workers’ compensation is required in nearly every state. Review your business needs to determine which ones are right for your company.
Bottom Line
General liability is insurance coverage that protects your business from claims for which you are legally liable. Third-party damage and bodily injury claims are some of the costliest claims your business can face, so ensure you have the right carrier protecting your business. Visit Simply Business today for free, no-obligation quotes from top providers for general liability insurance.
