General Liability Insurance: Cost & Coverage
Nathan Weller is an Insurance Expert focusing on insurance for small business. He has 15 years experience in insurance operations, FNOL, and claims handling.
This article is part of a larger series on General Liability Insurance.
Commercial general liability insurance (CGL) protects businesses from financial losses due to third-party bodily injury or property damage claims. A small business owner can generally expect to pay between $300 to $3,296 annually.
General Liability Cost by Industry
Industry Type | Premium per Year |
|---|---|
Brand Consultant | $386 |
HR Consulting | $400 |
Videographer | $273 |
Bookkeeping | $400 |
Chiropractor | $350 |
Janitorial Services | $3296 |
Interior Design | $1028 |
Real Estate | $1318 |
Factors That Impact Costs
When providers determine your premium, several factors are considered. These include:
- Location: Does your cleaning company service a business open 24 hours?
- Claims history: Have there been claims filed against you?
- Revenue: Higher revenue usually means more business which translates into greater risk exposure for the provider
- Employees: How many employees are performing the work and are they properly trained?
- Inherent risk: A carpenter who installs wood-burning fireplaces vs one who installs kitchen cabinets will likely have a higher premium
- Limit: A $4 million limit will cost more than $1 million in coverage
When applying for insurance, answer every question truthfully so that the provider can give you an accurate quote.
The Cost of Not Having General Liability Insurance
If you don’t carry CGL and are legally liable for an incident, whether it’s for property damage or bodily injury, you’re 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.
According to a study by The Hartford on the costliest claims, reputation harm is a liability claim costing on average $50,000. The average cost of a slip-and-fall claim is $20,000. The risk of not having general liability insurance is much greater than the premium paid to protect your business and assets from financial harm.
What Is General Liability Insurance?
General liability provides financial protection for your business by paying claims for which your business is found legally liable. These include claims for property damage, bodily injury, slander, libel, and advertising injury. CGL also pays the cost of legal defense for any claims that end up in court.
General liability has three specific coverages:
- Property damage: Damage to the property of a third party as a result of your business
- Bodily injury: This is a medical payment for injury to a third party and can include “pain and suffering”
- Personal and advertising injury: Losses from libel, slander, copyright infringement, and more
Why You Want General Liability
Liability claims can come in different ways:
- Your restaurant, Better Burger, makes a post on social media disparaging a competitor for using filler in its patties. That competitor could sue your business for slander.
- A sudden downpour results in customers tracking water into your business. Your manager doesn’t clean it up and neglects to put up a caution sign. A customer slips and falls on the wet floor, injuring their back. Their hearing aid falls out and breaks too. Because of your negligence after a rainstorm, you could be liable for the bodily injury and the property damage the customer experienced.
Without CGL, your business would be responsible 100% for any costs associated with those incidents. Surprisingly, despite the importance of CGL, in 2018, only 54% of small businesses had purchased the coverage.
Is General Liability Insurance Required Legally?
Typically, general liability isn’t required by law, but it’s best to check with your local business authority. However, CGL is often required when business contracts with another party. In those situations, you’ll need to produce a certificate of insurance (COI).
How to Get General Liability Insurance
Insurance is provided by an insurance carrier. An insurance carrier is a company that underwrites a policy and assumes the risk for your business. The Hartford is the best overall carrier for general liability and one of the cheapest for general liability insurance.
Visit The Hartford or call (888) 219-3051
Many providers will contract with a broker or agency to sell their insurance. The broker works with the customer to help them find the best policy for their business needs at the best price. Simply Business is an online broker that provides comparison quotes from multiple carriers. It’s also one of the best small business insurance brokers in 2022.
The final way to purchase CGL is by using an insurance referral service. Similar to a broker, a referral service will consider your business needs and pair you with the best broker available.
Tivly is an insurance referral service that works with more than 200 insurance carrier partners. It uses its experience in the insurance industry to understand which carrier will best fit your business needs based on the work you do and the expected risks your company faces.
Bottom Line
General liability is insurance coverage that protects your business from claims where you are legally liable. Third-party damage and bodily injury claims are some of the costliest claims your business can face, so it is essential to ensure you have the right carrier protecting your business. Visit The Hartford today for a free, no-obligation quote for general liability insurance.
