Is General Liability Insurance Worth The Cost?

Is General Liability Insurance Worth The Cost?
General liability insurance is one of the most important components of a total business owners policy (BOP), and yet, it’s not uncommon to hear people question whether a general liability policy is really worth the cost. The truth is, for the vast majority of business owners, the cost of not having general liability coverage far outweighs that of having it.
The fact is, a single lawsuit over even a trumped up allegation – even if you win in court, can cost thousands, tens of thousands, or even hundreds of thousands or millions of dollars in some cases. Medical bills of injured 3rd parties, property damage claims, or inadvertent damage to rental property by your own employees are also major risks you can’t afford to not cover yourself for ahead of time.

How Much Does General Liability Insurance Cost?
Where you live, the size and type of your business, which insurer you buy your policy from, and how much coverage you want to buy all have a huge impact on how big of a premium you’ll have on your general liability policy. That said, the national average is at $741 a year or $62 per month. The majority of small business owners pay somewhere between $400 and $600 a year for protection and 20% of them pay less than $400.

Thus, the costs of general liability cover can be significant but are not overwhelming. They can easily be written off as a necessary business expense.

Keep in mind that the price of coverage varies a lot from industry to industry. IT consultants who do most of their work remotely, for example, would pay a minimal amount for liability cover; while brick and mortar retailers, janitorial services, and construction contractors often pay the highest premiums.

What Does Commercial General Liability Insurance Cover?
To understand why general liability is worthwhile, you have to look at more than the costs. You have to consider the specifics of what it’s covering you against. Consider these key coverage components:

  • Medical and other expenses stemming from accidental injuries to non-employees (third parties.)
  • Property damage claims to personal property of third parties damaged by your workers.
  • Product liability – for when harm is caused by your “finished products.”
  • Damage to property you are renting for your business.
  • Advertising errors, libel, slander, or reputational harm.

It is easy to see how some of these kinds of liabilities could easily become a reality in the day to day operation of your business throughout the year. You can bolster your coverage further with various riders and other insurance types like commercial auto or errors & omissions as well.

How To Lower Your Insurance Costs As Much As Possible
There are a number of ways to minimize the cost of general liability insurance without creating undue risk. First, you could go for a lower coverage limit (like $1 instead of $2 million).

Second, you could bundle your general liability in with other business and/or personal insurance policies with the same insurer to save. Third, you can pay your full annual premium upfront for a discount.

And fourth, you can manage your risks to get a discount with some insurers and to improve your claims history. For example, a good safety training program for employees and a top-tier security system might help. Talk to Flagler County (FL) Insurance Agency today to learn additional ways to save!