Small Business Liability Insurance Cost
Small business liability insurance cost can vary depending on a variety of factors. Some of these include: your profession and the type of equipment you use, the location where you operate your business, your history with claims, and the coverage limits that you choose.
A policy with higher per-occurrence and aggregate limits will typically cost more than a policy with lower limits. Be sure to consult with a licensed agent to find the right balance for your business.
Small business insurance covers a broad range of risks, and the costs vary. Insurance companies weigh several factors when determining premiums, including the type of business and the location where it operates. In general, industries with higher risks pay more, such as brick-and-mortar retailers that have frequent customer interactions and contractors who work on other people’s property. The size of the company also matters: A financial consultancy that employs many workers may pay more than a solo IT consultant.
In addition to the policy limits that a business chooses, the amount of coverage and the deductible can affect cost. For example, a business can save money by lowering its per-occurrence limit to $1 million and increasing its aggregate limit to $2 million. Insurance specialists can help determine what coverage levels are appropriate for a specific business.
Other factors that influence the cost of a business insurance policy include its past claims history and whether it is in an industry with high rates of lawsuits. In addition, many providers offer discounts for bundling multiple policies into one, such as a business owner’s policy that includes both commercial property and general liability coverage. A business can also reduce its premium by implementing risk management practices that minimize the likelihood of accidents, workplace injuries and negligence lawsuits. For example, it can implement a safety program and offer employees regular training to reduce the risk of an accident at the office or on a job site.
The coverage limits you choose for your policy are an important factor in determining how much your small business liability insurance will cost. For example, the per-occurrence limit is the amount of money your insurer will pay to cover one claim and the aggregate limit is the total number of claims paid within a policy period (typically one year).
The limits you select should reflect the type of risks that are most likely to affect your business. For example, a construction contractor is at greater risk of an injury or loss than a retail store or accounting firm.
Some industries require higher limits to reflect the likelihood of costly third-party claims. Whether your business needs workers’ compensation coverage is another important factor in determining coverage amounts. It is also important to determine if your business structure will impact coverage needs. A corporation, for example, may be able to purchase lower coverage limits because any judgment against the company will be satisfied from its assets, while a sole proprietor might need higher limits because their personal assets could be seized in the event of a judgment.
Generally, most small businesses choose a standard general liability policy with $1 million per-occurrence and $2 million aggregate limits. However, higher limits are available and will increase your small business liability insurance cost. Many small businesses include product liability (also known as Products and Completed Operations) in their general liability, but for some types of industries, it is necessary to buy it separately.
The deductibles that you choose for your business will impact the costs of small business liability insurance. The higher the deductible, the lower your premium. However, you should choose a deductible that you can afford to pay out of pocket in the event of a claim.
Other factors that can affect the cost of your business insurance include your profession and the type of coverage you choose. For example, offices that don’t have a lot of foot traffic such as financial consultancies typically pay less for general liability than retail businesses that have a high risk of customer injury. The location of your business is also a factor, as businesses in areas with higher crime or wildfire risks may pay more for commercial property insurance.
Generally, the more coverage you purchase, the higher your premium will be. Some small businesses need multiple types of insurance, such as general liability for third-party property damage and bodily injury, workers’ compensation to cover employees’ medical care and a portion of lost wages, professional liability (or errors and omissions) to protect against mistakes in the course of business, and commercial auto to cover vehicles used in the course of work. Some insurers offer discounts when you bundle policies. And you can save money by paying your annual premium in one payment instead of monthly.
There are many types of small business insurance, and each protects against different types of risk. Some examples include general liability, which covers property damage, bodily injury or libel. Another type of small business insurance is workers’ compensation, which protects against injuries caused by work done away from the business. Other policies cover things like commercial auto, business interruption and electronic data. Some insurers provide online tools to help you compare costs and coverage options.
The cost of small business insurance depends on several factors, including the type and amount of coverage you choose. For example, if you want higher limits, you will pay more for your policy. Also, a claims history can have a major impact on premiums. Keeping your records clean can help you save on premiums.
Some insurance companies offer discounts for bundling multiple policies together. This is a great way to save money on your small business insurance. You can also consider a business owner’s policy (BOP), which bundles general liability and property insurance at a discount.
In addition to deciding what kind of insurance your company needs, you should make a list of your assets and determine their value. This will give you a good idea of how much to insure them for. Also, if your business changes, you should update your coverage accordingly.