Commercial general liability insurance (CGL) coverage protects businesses from financial losses due to third-party claims for bodily injury or property damage. Most businesses will need a CGL policy, especially if you work with the public. General liability insurance costs vary by industry, but the majority of small business owners pay between $400 and $600 per year.
Commercial General Liability Insurance Costs
Most small business owners can expect to pay between $400 and $600 per year for commercial general liability insurance (CGL). However, depending on the size, type, or industry of the business, the coverage limits and the deductibles, some small businesses can pay more than $1,000 per year for a CGL policy.
Commercial General Liability Insurance Cost by Industry
|Janitors and Maids|
All of the above industry averages represent the cost of commercial general liability policies with an aggregate limit of $2 million and a per-occurrence limit of $1 million. These are standard limits that meet the needs of most small businesses. The data comes from a sampling of 18,000 businesses, each with 10 or fewer employees. The $1,000 deductible amount used here is standard for most small businesses, not industry-specific.
One of the biggest factors that affects the cost of CGL insurance is industry. Construction and cleaning services pay some of the highest premiums. This is because their work occurs on somebody else’s property, so there is a heightened risk of property damage. Retail stores and restaurants have high foot traffic, increasing risk of bodily injury.
Home or office-based businesses, like a graphic design firm, usually pay the lowest premiums. This is because there is little foot traffic and minimal risk of property damage. On the other hand, there may still be risk of personal injury from copyright infringement or defamation.
Commercial General Liability Insurance Providers
When looking for a commercial general liability provider, you’ll speak to insurance agents, brokers, or both. Agents represent one insurance provider, whereas brokers can work with multiple carriers. What’s most important about the process of seeking the best insurance provider for you is that you get multiple quotes.
Here are five insurance providers we’ve researched that offer commercial general liability coverage to small businesses:
The Hartford is a large insurance company that does an outstanding job of catering to the insurance needs of the small business owner. Commercial general liability is the foundation of coverage for small business owners, but The Hartford can help with other coverage types you may need, such as commercial property insurance, commercial vehicle insurance, and workers compensation.
Progressive Commercial is another large insurance provider that knows how to serve the insurance needs of small business owners. Through their Progressive Advantage Business Program, Progressive Commercial offers insurance products specifically designed for small business. Their commercial general liability coverage is often packaged into a business owners policy along with property insurance to provide broader coverage for a greater total value.
AIG offers customized commercial general liability insurance for businesses of all sizes. With 95 years of history and locations all around the world, AIG has proven its value in providing superior underwriting experience in almost every imaginable industry. The also specialize their claims service to ensure that they are handled by AIG representatives who understand the business of their clients.
Allstate insures over 10,000 small businesses in the U.S. and has partnerships with many trade associations, where small business owners may qualify for discounts. Working with a large insurance company like Allstate also ensures a strong financial position, which is an important feature with liability claims that can be high.
Farmers is a large insurance company with a small business feel. Farmers agencies are locally owned, which often translates into dedicated service to the community and knowledge of how to best cover the insurance needs of local small businesses. Like other large insurance companies, Farmers has the ability to cover a wide range of small business insurance types as well as personal insurance coverages.
Tips on Applying for Commercial General Liability Insurance
Although commercial general liability is a standard insurance product, insurance coverage requirements for small businesses vary by policy. This is because the insurance needs of each small business policy holder are unique. Therefore, it’s important to know how to shop for the right policy and to know what information to have ready before you begin.
Here are the primary items you’ll need to gather before shopping for CGL insurance:
- Business legal name, contact information, and tax I.D.
- Revenue estimates for the year
- Number of employees
- Number of years you’ve personally worked in your industry
- Number of years your business has been in the industry
- Details of any other insurance you currently have
- Details about the nature and risk exposures of your work (to what extent you work with the public, hazardous materials, etc.)
- Claims history (at least the past three years)
- Insurance requirements (licensing or requirements for certificates)
Here are the four most important things to remember when buying commercial vehicle insurance:
1. Know Your Risk Exposures
The primary purpose of purchasing commercial general liability insurance (CGL) is to protect your business against financial losses arising from third-party claims for bodily injury or property damage. Although a good insurance agent or broker can help identify and cover your greatest risk exposures, knowing the risks unique to your business before the application process is necessary to get the right coverage for you.
2. Look for Value but Never Underinsure
You don’t want to be underinsured, nor do you want to buy unnecessary coverage. If the standard CGL policy is not sufficient to cover your risk exposures, don’t hesitate to add endorsements or standalone policies, where necessary. Also, higher deductibles and lower limits may reduce premiums but could be costly when there is a claim.
3. Use an Agent or Broker Who Knows Your Business
General liability is not industry-specific coverage. Therefore, each CGL policy will not look the same. When shopping for CGL insurance, be sure to seek an agent or broker who understands the specific needs of your business. They can also help you buy the right coverage types with the ideal limits for your particular risk exposures.
4. Complete the Application: Include All Pertinent Information
It sounds obvious, but be sure to complete the application and include all information that can tell the insurance agent, broker or underwriter how to best protect your business against risk exposures. Providing accurate and honest information will not only help protect your business, but may also prevent you from being denied coverage for a false statement on the application.
What Commercial General Liability Insurance Covers
Commercial general liability insurance (CGL) covers third-party claims for bodily injury and property damage. A CGL policy will also include other types of personal injury to third parties, such as emotional injury, loss of income, and defamation. First-party coverages (your expenses), such as legal defense costs, settlement of claims, and lost profit or wages, may also be included.
Since the CGL policy is one of the most essential types of small business insurance, it is often part of a business owner’s policy (BOP), which is a packaged bundle that combines general liability with professional liability coverage. If there are additional coverage types needed, the small business owner can have them added to the BOP as an add-on or endorsement.
Types of Commercial General Liability Insurance
|Bodily Injury||Bodily injury to third parties due to your negligence or your products|
|Property Damage||Damage to the property of a third party from your business|
|Medical Payments||Injuries sustained by a non-employee on your premises|
|Personal & Advertising Injury||Losses due to claims from libel, slander, copyright infringement, use of another’s advertising idea, wrongful eviction, and more|
Slip and fall cases are common examples of commercial general liability bodily injury claims. Say an employee is mopping in your store and forgets to put up a warning sign. If a customer slips, falls and sustains injuries, they can sue your business for damages, including medical payments. Mental injuries and emotional distress can also be considered injuries.
Property damage covers cost of damages to someone else’s property due to an accident for which you are found at fault. Let’s say you run a residential cleaning service. One of your employees is cleaning a wealthy customer’s home and accidentally breaks an expensive vase. CGL insurance would cover the cost of damages up to your policy limit.
Personal and Advertising Injury
In an advertising campaign for your auto repair business, you compare yourself to a competitor. You state that your competitor has dishonest pricing. Your competitor finds this claim unfounded and sues you for defamation. A commercial general liability policy would cover your defense, up to your personal damages advertising coverage limit.
What Commercial General Liability Insurance Does Not Cover
The primary coverage types included in a standard commercial general liability (CGL) policy will protect against the most common risk exposures that the majority of small businesses face. However, there are some risk exposures and respective coverage types that are excluded from a CGL but may still be needed by the business.
Here are some common examples of claims usually not covered by CGL insurance:
- Employee Injuries: CGL insurance does not cover employees who are hurt on the job. This is covered by Worker’s Comp Insurance instead.
- Professional Negligence: CGL insurance will not cover professional errors, such as a mistake made while writing a contract. If you’re looking for this type of coverage, check out our guide to Errors and Omissions Insurance.
- Liquor Liability: If you sell, distribute or serve alcoholic beverages, a CGL insurance policy typically won’t cover any damages or injuries that result from alcohol consumption. Liquor Liability insurance may be available for an additional premium, however.
- Product Liability: Also known as Products-Completed Operations Coverage, this involves any damages that occur after the job or transaction is complete. For manufacturers and construction businesses that need extensive coverage in this area, you may need a separate Product Liability Insurance policy.
- Commercial Vehicles: If you have vehicles that your business uses, they will require their own coverage. Vehicles could include anything from a semi-truck to a fleet of company cars for a sales team to a food truck.
According to Christine Lucas, Vice President, Erie Insurance:
“Commercial general liability coverage isn’t always enough in every industry. For example, there are some instances where you may need extra coverage as a ‘homepreneur.’”
Christine’s suggestions for homepreneur coverage areas include:
- Business Personal Property: Most homeowners policies provide limited coverage of $500 to $1,000 for tools, machines or other equipment you use exclusively for your business. If your belongings are worth more, you need extra coverage.
- Premises Liability: Suppose you cut hair in your basement, and a customer trips and falls over a misplaced basketball. That customer might sue you. If he does, you’ll want premises liability since your homeowners policy won’t cover a liability claim filed by a business client.
- Off-premises Liability: Home-based business owners are often liable for injuries to their clients or damage to their clients’ property that occur away from their home. For example, a real estate agent could be liable for injuries a potential buyer sustains during a home showing.
- Professional Liability: This type of coverage protects you if someone accuses you, for instance, of doing inadequate or negligent work. A few examples could include a bookkeeper making a critical accounting mistake for a client, or a real estate agent accidentally misrepresenting key information.
Other missing coverage gaps will vary depending on your policy. You may be able to get coverage for an additional premium, or find it from a different carrier. However, the right coverage at the best pricing is almost always accomplished by bundling coverage types into one package.
Who Needs Commercial General Liability Insurance
If your business works with customers, contractors, clients, or vendors, it’s likely you’ll need commercial general liability (CGL) coverage. In addition to protecting against financial losses from third-party liability claims, many small business owners often need a certificate of liability insurance, proving they have CGL coverage for licensing requirements or for entering into contracts.
Here are a few examples of cases where business owners need general liability insurance:
- While visiting your business, a customer slips on a wet floor in your bathroom and sues you for bodily injury.
- An employee in your business damages the property of a client while working at the client’s home on a job.
- A fire starts in a space you lease and does damage to the entire building, damaging property of other businesses.
It’s also important to note that business owners working out of their own homes may need commercial liability coverage in addition to their homeowners policy. This is because homeowners insurance policies normally exclude business-related claims. And if a homeowners policy covers the business owner, the limit may be insufficient to cover the claim.
According to Ed Baldwin, founder and CEO of ProfileGorilla:
“Commercial general liability is the most common policy small business owners buy because the coverages it provides are tied to the most common incidents, such as a customer getting hurt on your property, or from using your product, or even things like lawsuits and copyright issues. We also see a lot of businesses getting commercial general liability when applying for loans, renting office space, or when pursuing Enterprise or Large Business clients who require general liability coverage in their contracts.”
A commercial general liability insurance (CGL) policy is essential for businesses that work with the public, especially if operating out of an owned or leased building. CGL covers you in the event that somebody (besides your employees) is injured on your premises. Home-based businesses will also need CGL coverage in addition to their homeowners policy.