How To Find Cheap Liability Insurance
Accidents happen. And when you’re a business owner, people tend to think those accidents are all your fault. Maybe they are — and maybe they aren’t! Either way, a general liability insurance plan can provide protection for your business when accidents turn into lawsuits.
When small businesses are sued for damages following an accident, the financial effect can be disastrous. In many instances, a business may never recover from the fallout. General liability insurance protects your assets in the case of a lawsuit due to accidents or injury and can provide peace of mind for small business owners.
Read on for a look at some basic facts about liability insurance. We’ll talk about what type of incidents this kind of insurance covers, discuss costs and plans, and steer you in the right direction if you’re ready to buy.
Table of Contents
- The Basics Of General Liability Insurance
- Average Cost Of General Liability Insurance
- How Much General Liability Insurance Do You Need?
- Know Where To Look
- Know How To Save On General Liability Insurance
- General Liability Insurance VS A Business Owner’s Policy
- When Cheaper Isn’t Better
- Protect Yourself & Start Saving
The Basics Of General Liability Insurance
A general liability insurance plan protects your business from third-party claims of bodily injury, accidents, or property damage. It is the foundational insurance policy upon which most other business insurance policies are built, so if you are planning on insuring your business, general liability should be your first purchase.
Even if you don’t think your business could be the victim of a lawsuit, insurance exists so you don’t have to carry around a laundry-list of potential risks and worry about them obsessively. Instead, you can run your business and let the insurance provide protection, no matter what happens.
What Is General Liability Insurance?
A general liability policy will cover your expenses should you need to go to court to defend an accident, an injury, or damage to property. Typically, your policy will pay for legal representation, litigation fees, out-of-court settlements, and judgments set by the court.
What Does General Liability Insurance Cover?
Your general liability policy will cover the following broad issues that may arise with your business:
- Bodily Injury To Someone Or Property Damage Because Of Your Business/Employees: If a customer slips and falls on a spilled Diet Coke or your contractor breaks a client’s window while working at their home, this insurance will cover the medical bills for your customer and legal costs to defend yourself.
- Product Liability Should Someone Sue You For A Faulty Product: If your fast food joint is implicated in a spread of E. coli or your talking baby doll toy is terrorizing children, well, your insurance company will cover the litigation costs of those two lawsuits.
- A Lawsuit For Slander, Libel, Or Copyright Infringement: Most small businesses have a presence online and with the fast and furious pace of the internet, tweets or Instagram posts can have a quick way of gaining attention–for better or for worse. Libel occurs when you print untruths about someone and slander is when you speak those untruths to other people. Many businesses, small and large alike, have been the subject of lawsuits because of something written on the internet or an ill-conceived advertisement. A joke, a meme, an accusation about another business–all of it is another way your business is at risk.
Who Needs General Liability Insurance?
The people who need general liability insurance the most are the people who didn’t think they would need it and suddenly find themselves facing a lawsuit. Even the smallest of businesses could benefit from having basic coverage. Everyone and anyone can be at risk for a frivolous (or not-so-frivolous) lawsuit. However, you should definitely consider a general liability plan if:
- You have a physical storefront
- Your business has a social media presence
- You do business at other people’s homes
- You work with clients that might require proof of insurance
- You offer clients a physical product
- You run advertisements
Average Cost Of General Liability Insurance
As with most business decisions, the decision to purchase insurance (or not) comes down to cost. The good news is that general liability insurance does not have to be expensive.
According to Insureon, over 53% of small businesses pay between $400-$600 a year for general liability insurance and 21% paid less than $400 a year. There are many factors that can impact that yearly premium including your specific risks, how much liability insurance you need, and what type of business you run. The variables that will most influence the cost of your liability insurance are the size of your business, how many employees you have, the location of your business, and the accumulative risk factors of your business.
For a small business that needs one million dollars of coverage, the price can be as low as $30 a month.
How Much General Liability Insurance Do You Need?
As a small business owner, when you start to shop for your general liability insurance, you’ll have to decide how much coverage is the best for your business. A good rule is that the riskier your business is, the more insurance it may need. Also, check with your state’s business guidelines: a few states require you to have general liability insurance by law. Each business is different, but your coverage will depend on your answers to the following questions:
- How big is your business?
- How many employees do you employ?
- What type of product do you create?
- Where is your business located?
- What kind of risks can you anticipate?
Know Where To Look
When you are ready to make a purchase, there are quite a few places to secure a general liability policy for your business. If you already have an insurance policy through a carrier, check with a broker or insurance agent there to see about adding general liability to your plan.
But with thousands and thousands of insurance carriers, how do you know which one will work well for you?
Most insurance companies carry a basic form of commercial general liability insurance. You can use a website like Coverhound, Coverwallet, or Insureon to enter your business information and receive comparison quotes.
Know How To Save On General Liability Insurance
If the cost of your general liability insurance is too high or you are worried that it’s an expense you can’t afford, there are some ways to cut down on the costs of the policy. Some of these methods might require little or no work on your end, but if your business is a risky venture, expect the cost of insurance to be higher.
Bundle Your Policy
One of the best ways to save is to bundle your general liability policy with commercial property protection in a Business Owner’s Policy (see below for a more detailed examination of the differences). Also, if you have more than one employee, you are required to provide worker’s compensation insurance, disability, and unemployment insurance, so when you bundle your general liability policy with these other insurance policies, your costs could decrease.
Don’t Overestimate Your Business Costs
When you shop around, insurance companies will want to know how much it costs to run your business. We get it, you’re human; when you talk to investors or your parents about your business, you may be tempted inflate your yearly income and the amount you pay your employees. Be warned — if you do inflate your value while shopping for insurance, your policy can become more expensive. Be accurate but conservative in assessing your gross worth and payroll expenses.
Compare Multiple Quotes
Don’t just buy the first policy you find. Shop around and compare multiple insurance providers. Use a website that specifically comparison shops for you (businesses like Coverhound, Coverwallet, Insureon, or Bizinsure).
Pay Your Premium In Full
Many insurance companies will offer a discount if you pay your yearly premium in full versus paying a monthly rate. Also, some insurance companies will waive fees if you set up automatic payments, so ask an insurance agent or broker to explore payment options that could lower your premiums.
The riskier your business is, the higher your general liability insurance expenses will be, so taking extra steps to manage and minimize risks could save you some money. Sometimes this is as simple as proving to your insurance company that you are compliant in all safety guidelines and have invested in teaching your employees safety rules. Other times, moving your business’s location out of a highly trafficked area can save thousands on liability. Obviously, it might not be easy to pick up and move, but in general, finding ways to mitigate risks will lower your insurance premiums.
General Liability Insurance VS A Business Owner’s Policy
A Business Owner’s Policy (BOP) bundles general liability and property insurance. For companies with a physical storefront location, property insurance is another crucial policy that could save your business from ruin in the case of a flood, fire, or theft. You might be in need of a BOP if you fall into one of the following categories:
- You have a physical business location
- You have property and equipment you need to protect
- You have fewer than 100 employees
- You want to bundle your general liability and your commercial property policies to save money
When Cheaper Isn’t Better
As a business owner, you understand the balance between cheap and fast and know that, fundamentally, not all insurance is created equal. One of the first things you can do is check the insurance company’s rating via A.M. Best, Standard & Poor’s, Fitch or Moody’s.
But here are three reasons why cheaper isn’t always better:
- A small/cheap insurance policy may not offer you the protection you need. If you accept a high deductible and a low ceiling to keep monthly premiums down but encounter a legal matter that costs your business thousands of dollars, you aren’t saving in the long run.
- If a price is low and it seems too good to be true, then it probably is. You don’t want to find out too late that your policy has a number of exclusions that will make it difficult to file a claim.
- You are paying for a policy, but you are also paying for the expertise and hand-holding you’ll need if your business is involved in a lawsuit. For that, it’s worth it to look at reputable insurance companies who have a track record of helpfulness.
Protect Yourself & Start Saving
General liability insurance is sometimes called “Slip and Fall” insurance — and for good reason! A “slip” can happen anywhere and you never know when you’ll be deemed liable. According to the Insurance Journal, in 2015 the average cost of a “slip and fall” lawsuit was around $20,000. If you don’t have that sort of money lying around to pay for medical and legal fees, then a policy for as little as $400 a year is not just a needed business expense, it is imperative.
The insurance industry might be in the business of worst-case-scenarios but a general liability insurance policy doesn’t have to set you back significantly — and the protection it provides is priceless. This is especially true if you live in a state that is known to favor plaintiffs over small businesses in a court of law. Do your homework, research the best policy for your business and industry, and get covered today!