How Much Does General Liability Insurance Cost? | General Liability Insurance Education
The cost of business liability insurance coverage for a business can vary considerably, depending on several rating factors.
- Business Operations (what the business does)
- Annual Revenue
- Number Of Employees
- Location Of Business
- Loss History
- Policy Limits
- Additional Coverages Needed
Understanding How Business Operations Impact General Liability Insurance Premiums
Normal Business operations have a major impact on the cost of general liability insurance. This is because the type of work you do will determine the risks associated with your business.
For example, a construction company may face greater general liability exposure than an accounting firm as they are more likely to experience property damage or bodily injury.
In general, more dangerous occupations come with higher general liability insurance premiums. Businesses that involve hazardous materials, construction, manufacturing, or other high-risk activities can expect to pay more for their general liability insurance than those operating in less hazardous industries.
How Annual Revenue Can Impact the Cost of General Liability Insurance
Annual revenue is one of the major rating factors that general liability insurance companies use to calculate premiums.
This is because the more money a business earns, the greater its exposure and risk become. As businesses grow, they often take on bigger contracts and acquire larger amounts of property or assets; this increases the potential for accidents or losses resulting from general liability claims against them.
For example, if an HVAC (Heating & Air Conditioning) takes on a larger client with higher general liability risks than normal (such as working with hazardous materials), their annual revenues may increase along with their premium rates due to the increased risk involved.
The Impact of Employee Numbers on General Liability Insurance Premiums
The number of employees a business has is an important rating factor when it comes to general liability insurance because it can indicate the potential for a higher number of general liability claims.
As the number of employees increases, there is an increased risk that a general liability claim could arise.
A company increases the number of employees in direct correlation with the increase in the amount of work or services the small business provides. The more work and service a company provides, the greater the likelihood that a loss could occur.
Overall, the number of employees a business has is an important consideration when calculating general liability insurance premiums and should be taken into account when choosing coverage limits and deductibles.
How Location of Operations Can Affect General Liability Insurance Premiums
Location is an important factor when it comes to general liability insurance premiums, as it can affect the level of risk associated with a business.
Different states and regions may have different laws regarding general liability insurance, which can affect the cost of coverage.
For example, general liability insurance in New York would cost more than comparable North Carolina general liability insurance due to the legal climate of each state. The more litigious the state, the greater the likelihood the courts will hand out more and larger lawsuit awards that the insurance company will have to pay.
Overall, location is an important rating factor when it comes to general liability insurance because it can affect both legal requirements and specific risks associated with a business’s area of operations. It is important for business owners and insurers alike to understand how their location affects general liability premiums so that they can make sure they are properly covered at the right price.
Understanding How Your Policy Limit Affects Your General Liability Insurance Premium
When it comes to general liability insurance, the policy limit is an important rating factor for general liability premiums.
The higher a business’s general liability policy limit, the more the insurance company providing the general liability insurance could potentially have to pay for a claim. A business’s policy limit can be adjusted depending on how much risk they are willing to assume in exchange for a lower premium rate.
The general rule of thumb when selecting your general liability policy limits is that you should have enough coverage to protect all of your assets (such as buildings and materials) plus any liabilities that may arise during operations (including legal fees), with some extra room added just in case.
With general liability insurance, businesses typically choose general liability coverage with Per Occurrence Limit of $1 million and Aggregate Limits of $2 million; however, these figures will vary depending on the size of the company and its industry-specific risks posed by their day-to-day operations.
Business owners should consider several factors when deciding what amount of general liability coverage best suits them:
- The type of work they do
- Their financial situation
- The state laws associated with the area in which they
Understanding How Purchasing Add-On Coverages Can Impact Your General Liability Insurance Premiums
Small Businesses can have unique needs when it comes to their business insurance that requires the addition of coverage(s) to the base liability insurance.
Some of the most common endorsements are:
- Products-Completed Operations
- Contractual Risk Exposures
- Professional Liability
- Hired And Non-Owned Auto Liability
- Additional Insured
- Waiver Of Subrogation
These additional coverages can drive up business insurance costs because the Insurance Carrier faces the potential for increased claims payouts. All of these general liability rating factors contribute to the eventual cost of general liability insurance coverage for a particular policyholder, so understanding how they are applied helps ensure that small businesses are getting the best deal possible on general liability coverage.
