General Liability insurance is so important because your small business today is a big industry in the future. Not any business wants to stop at the start or middle due to any simple accident that causes harm to people or damage other’s property. You may have to pay a big amount due to this type of accident that may be a reason of business shutdown.
As you have a small business, you also have a dream to make it bigger, employ more people and have a better life. So you may continue to grow your business by going cheapest general liability insurance small business. There are different factors to buy general liability insurance, and it is also time for you to know the average cost of liability insurance for small business.
General Liability Insurance Cost Factors For Small Business
Normally a business in spite of being small may have a risk that may do harm to the customers or other’s property. The customers may occupy more space in the stifling area and then you will have more liability. More liability indicates that you have more risk which leads to a high price of insurance.
Though you have a small business, there may be risk factors which may be low or high. For example, you deal with your clients on Skype or virtually, and you have less liability or risk. At any restaurant, you get foods from the nearest kitchen as self-service where there are gasoline, electricity or other many materials that may pose risk to the customers, surely in this type of place, the risk factors are much more compared to the virtual place.
It is also seen that a small business does not comply with rules and business laws. This simple mistake may lead to the higher risk that may be reasons of out of pocket as you may have to pay high price for any loss.
Location also is another risk factor. Your business is in a place where the public gathering is much more. In the place, there may be a lot of people, materials, a machine where risky exposure is much more. In that case, the liability insurance will be high because there is no safety procedure and people may be injured at any time. More importantly, the place where you are leading your business historically has more claims of injury and other’s property damage. Undoubtedly in those places, the rate of liability insurance is going to be high.
Number of Employees
The number of employees is another factor to be a high rate of liability insurance. You have a small business and employ fewer employees. It means you have less risk compared to the other business that has many employees. So the liability insurance will offer also less price for the coverage if your business is safe and has fewer employees.
Meeting With Clients
Most of the legal business, real estate business may run business in any apartment. But the customers may visit your office where your liability level is high. On the other hand, the customers may be met in the coffee shop, in any park where there is less liability level. So it is important to point to note that you may make sure less liability level to get cheaper liability insurance rate.
Limit of Liability Insurance
Liability limit is called a maximum amount that an insurance company will arrange payment for a claim on the basis of the policy period. If you feel that your business has a higher risk, it is so important to go higher limit. There are different limit according to risk. Liability insurance for a car has a limit like 100/250/100 numbers in a thousand that indicates how much is liability insurance for car.
In the same way, there is another way to determine limit and the most common limit of liability insurance is $1 million/ $2 million. It has been found that 85% small business prefer this limit. There are also $300k/600k which is the lowest limit of the liability insurance. The highest limit of the liability insurance is found $2m/$4m. Here are two main types of liability insurance-
- $1 million occurrence limit -The policy is active and the insurer has to pay up to $1 million any single claim.
- $2 million aggregate limit- It is called a lifetime of policy taking 1 year and the insurer will pay up to 2 million to cover claims.
$1 million /$2 million is an average option and 85 percent prefers, a small business may opt for first one and contractors or people working on others property may go the higher limit to reduce the loss amount as their business is considered as one of the risky ones.
Actual Average Cost of Liability Insurance For Small Business
Generally, the small business pays the lower price of the insurance where there is less risk. The high price of liability insurance depends on the risk factor of the business.
However, it is mostly seen that a small business has to pay the cost of the liability insurance at $400 to $650 on yearly. So the monthly cost comes with a very lower amount and it is only about $40.
According to insureon, 53 percent of small business pay between $400 to & $650. Other 22 percent business pay $200 to $400 as they have a very lower level of liability and risk.
In the event of limit, &$1 million/$2 million the average cost of the liability insurance is $1284 and the median has only $584.
However, this amount is not so high because any small business is able to this amount. In case any accident you face in your liability, you may have to pay over $20,000 for a single accident. So it is better to go liability insurance to protect any shutdown of your business.
How To Lower Liability Insurance Premium
Though a small business is not aware of insurance but this insurance can be safety and security of the business that helps last for a longer time. Any ignorance of law and risk factors may bring a huge loss for the business or this may be a reason for the business shutdown. So you buy liability insurance at a cheaper rate.
Make Sure Your Business Safe
When you are going to buy liability insurance, you must make sure that you are business in safe mode. The insurance company may also inspect your business premises or business condition to offer you discounts. The different insurance company may go with you by offering a discount if you have a safe business where everyone is safe. For safety feature, you may set up a closed-circuit camera, remove any hazardous condition at your building or premises, make sure training for the employees and be careful on social media activities.
Pay The Premium Upfront
Many insurance companies must offer you discounts if you pay the entire amount upfront. This can help you get more facilities from an insurance company. So you may avoid the practice of monthly or yearly payments which are still now existing. But the upfront amount will depend on your financial capability.
Go Umbrella Policy
As a small business like a superstore, you are happy when your customers are purchasing everything from your stores. It is true in the insurance company. When you are buying multiple insurance coverage for your business, surely you are going to get a high amount discount which can lower your premium.
More liability you have more risk you have to face. It is important to protect risk factors first and make your business safe. However, liability insurance for small business is one of the prudent decisions to make sure you are running your business in a sustainable way. A simple accident may be a reason for business shutdown indeed.