General Liability Insurance: How Much Small Business Needs to Spend

Though subject to a bevy of factors, the General Liability insurance coverage costs less than what you might think and offers more liability protection than you bargain for.

Commercial General Liability insurance (GL) is more than just about liability protection. It’s your competitive advantage over uninsured competitors. Well, that’s easy to understand why.

The GL coverage reveals your level of responsibility towards your workers, and clients and their properties. It shows you are accountable for any on-job accident involving you, your crews, your products or your business activities. Plus, your clients get the impression that you mean business. All this translates into lasting client loyalty, and steady repeat and referral business.

How much does the general liability business insurance cost? Relax! It’s well below what people perceive it to be. Specifications may vary, but the cover averagely costs $30 a month. That’s equivalent to a dollar a day. Even though the cost is subject to multiple factors, 95% of businesses end up paying below $50 monthly. Only 1% of them shell out over $100 per month.

What’s Covered?

Per The Hartford’s Small Business Claims, about 40% of small businesses will be dealing with a general liability claim in the next decade. Here, the general liability insurance steps in, helping small businesses ward off financially crippling damages and get their business back on track. For just a dollar a day, the coverage can hedge you against the following:

Injury

Someone sustains bodily injuries due to your business operations. Say, a client fell on a wet floor on your premises and ended up with a fractured leg. Now, the insurance cover would pay the compensation, which can be either a mutual settlement or a court judgment.

Property Damage

Should the client’s property be damaged due to your negligence, the GL coverage comes to the rescue. Imagine your crew damages the client’s expensive piano during a restoration job. The claims can be settled with the insurance payouts, rather than incurring out-of-pocket expenses.

Personal and Advertising Damages

Advertising efforts often go wrong, causing financial losses to your clients. The liability claims might be related to the unauthorized use of someone else’s intellectual property, slander, libel, copyright infringement, privacy breach, fake arrest, and malevolent prosecution.

Medical Payments

The medical payment component of the GL coverage ensures payouts for medical care of someone sustaining injuries at your business premises or a job site. This may include, but not limited to, primary medical care, medications, surgery costs, ambulance charges, nursing fees and more. Unlike bodily injury coverage, liability proof isn’t needed. For non-serious injuries, the payouts are made instantly upon filing a claim, taking the lawsuit out of the equation.

Defense Costs

When a settlement is unsuccessful, the “victim” will invariably sue you. This leads to a long, drawn-out legal battle, costing you in time and money. The legal counsel who represents you accounts for the bulk of legal defense expenses. What if the legal counsel is assigned by and paid for by an insurance company? That’s not wishful thinking but a reality with GL coverage.

What Impacts the Costs?

The GL cover cost cannot be nailed down to one single factor. There’re many at play, such as:

Nature of the Business

Not all businesses are created equal. Some are more prone to occupational hazards than the rest. The more risky ones are required to shell out higher premiums. Say, a cleaning business will be paying more than an accountancy firm.

Industry Experience

How many years you have spent in business usually factors into how much premium you’ll pay. A business with rich industry experience and a steady revenue growth ends up paying higher general liability business insurance cost.

Location

Your geographical location can impact premiums. Expect higher costs if you are located in the heart of a highly populated city, as the damage and injury liabilities are more here. Considering relocation? Keep this in mind to save on premium outgo.

Employee Strength

The more the employees, the higher will be the premium.

When it comes to general liability insurance coverage, you get what you pay for. Higher coverage’s mean a higher level of liability protection in the wake of an eventuality. Note that, GL insurance is not a one-fit solution. What works for your competitor might not work for you. So, the thumb rule is to factor in your requirements, shop the market, and choose wisely.

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About FinanceGAB

Ajeet Sharma is a financial blogger and I am blogging since 2017. Financegab is a personal blog dedicated to personal finance. The main aim of this blog to help people to make well-informed financial decisions.
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