How Much is General Liability Insurance

General Liability Insurance is usually cheap, 95% of business owners pay *less than* $50 a month, and only 1% pay over $100 1 . These 7 factors can greatly influence how much you'll pay for general liability insurance.

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1. Industry Affects your General Liability Insurance Premium 

Some industries have higher risks than others, so insurance premiums can vary accordingly. For example, construction or healthcare businesses might have higher premiums compared to consulting or retail businesses.

seven industries are commonly associated with the highest level of risk

  • Financial Services - market volatility, regulatory changes, credit risk
  • Oil & Gas - risks related to oil prices, geopolitical instability, environmental concerns 
  • Construction - project delays, cost overruns, safety hazards, & legal disputes
  • Pharmaceuticals & Biotechnology - high research & development costs, regulatory challenges, patent expiration risks, and the uncertainty of clinical trials
  • Technology & Startups - tech advancements, fierce competition, IP disputes, cybersecurity threats, & market volatility contribute to the industry's risk profile.
  • Airlines and Transportation - risks associated with fuel price fluctuations, geopolitical events, safety concerns, natural disasters, and regulatory compliance.
  • Mining - Mining operations involve geological uncertainties, commodity price fluctuations, environmental impact, labor disputes, and regulatory compliance challenges
While it's impossible to eliminate risk, some industries are generally considered to have a lower risk profile compared to others. These tend to have the lowest premiums:
  • Utilities - tend to have stable demand, regulated & enjoy consistent cash flows
  • Healthcare - benefits from the constant demand for medical services and products
  • Government & Public Admin. - U.S & Maryland are associated with lower risks
  • Education - education tends to maintain a relatively stable demand over time
  • Insurance - Insurance itself is a risk mitigation tool
  • Food & Beverage - their production & distribution tend to have stable demand patterns
  • Consumer Staples - in demand regardless of economic conditions, making the industry less susceptible to economic downturns 

2. Size & Revenue of your Business Increase General Liability Insurance Costs

Generally, larger businesses with higher revenue may pay higher premiums because they typically have greater liability exposure.

larger businesses typically have more operations, employees, and assets, which can increase the potential risks and liabilities associated with their operations. With a greater exposure to risks, insurance providers may charge higher premiums to account for the increased coverage needed.

The revenue of your business is often used as an indicator of its financial capacity. Insurance providers consider revenue as a factor because it correlates to the scale and financial resources of the business. Higher revenue businesses generally have more financial capability to handle potential claims, which may result in higher premiums.

3. The Coverage Limits you Choose

The more coverage you want, the more the premiums will be. It's important to find the right balance between adequate coverage and affordability.

Always consider opting out of optional coverages:

  • Umbrella Liability Insurance
  • Professional Liability Insurance (Errors and Omissions Insurance)
  • Cyber Liability Insurance
  • Employment Practices Liability Insurance (EPLI)
  • Product Liability Insurance
  • Where your Business is Located

4. Location, Location, Location

Geography matters! Local laws, legal climate, and claim frequency in the area can impact insurance rates. A summer time business in Ocean City probably has a higher general liability rate than Jarrettsville, Maryland.

5. Claims History Affects General Liability Insurance Premium

Insurance providers consider your business's claims history. If you've had frequent claims or costly settlements in the past, it may result in higher premiums.

6. Risk Management Practices Reduce General Liability Insurance Costs

Insurance providers evaluate your risk management practices. Having strong risk management strategies, safety protocols, and employee training programs can potentially lead to lower premiums.

You could begin regular safety inspections, employee training on safety protocols, implementing proper security measures, and maintaining compliance with applicable laws and regulations. By addressing risks proactively, you can reduce the likelihood of accidents, injuries, or property damage, which can translate into lower insurance premiums.

Some insurance companies offer risk management services and resources as part of their policies.

7. The Policy Deductible 

The deductible is the amount you agree to pay before your insurance coverage kicks in. Generally, choosing a higher deductible can result in lower premiums, but remember that you'll be responsible for a larger portion of any potential claims and that's not unique to General liability insurance that applies to all types of insurance.

Remember, these factors can vary between insurance providers, so it's best to consult with them or insurance brokers. 

1 Hiscox small business survey

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