How Much is Liability Insurance for a Small Business?
Commercial liability insurance is a necessity for any business. It protects your small business against financial damages resulting from lawsuits and covers common risks like customer injury and customer property damage. But how much is liability insurance for a small business?
The cost of general liability insurance for small businesses varies based on several factors, including your daily business operations, coverage limits, and other criteria.
Here’s what small businesses need to know about general liability insurance, including what it is, what it covers, and how much it costs.
What is General Liability Insurance?
General liability insurance protects small businesses against the costs that may arise when a customer experiences a bodily injury, advertising injury, or property damage and your business is held liable.
If a customer sues your business, general liability insurance can help cover legal expenses, including legal defense costs, court fees, settlements, and other costs.
What does it cover?
General liability insurance includes coverage for:
- Bodily injury: If a customer is injured in an accident that involves your small business, liability insurance may help cover medical expenses as well as legal expenses if the customer sues your business.
- Property damage: If your business accidentally damages a customer’s property, liability insurance can help pay to repair or replace the property.
- Advertising injury: Advertising injury refers to things like libel, copyright infringements, and slander. If a customer sues your business over one of these issues, liability insurance can help cover your legal costs.
General liability insurance also covers your business if your products cause property damage or bodily injury.
Liability insurance does not cover:
- Employee injuries
- Employee discrimination
- Commercial property
- Company vehicles
- Professional errors and omissions
For coverage in these areas, you will have to purchase separate business insurance policies.
Who Needs General Liability Insurance?
General liability offers essential coverage for any small business that is open to the public and works closely with customers.
Ask yourself these questions:
- Does your business own property that is open to the general public?
- Does your business work with customer property (e.g. a vehicle repair shop)?
- Do you rent or own commercial property?
- Does your business frequently work with customers or clients?
If you answer ‘yes’ to any of these questions, your business needs general liability insurance to protect itself against potential damages.
How Much Does Liability Insurance Cost for a Small Business?
The cost of small business liability insurance varies depending on several factors, including:
- Industry
- Business operations
- Liability limits
- Location
- Claims history
While costs can vary based on these factors, small businesses typically pay anywhere from $300 to $600 per year for general liability insurance, which is a relatively small expense compared to the potential medical and legal expenses that may result if your business is responsible for a customer injury or property damage.
How Much Coverage Do You Need?
The standard liability limits for small businesses are $1 million per occurrence and $2 million aggregate. This means that the policy would pay up to $1 million for a single occurrence and $2 million total over the lifetime of the policy. These limits are generally sufficient for most small businesses.
If general liability insurance is a requirement for your commercial property lease, make sure to purchase enough coverage to fulfill the requirements stated in your contract.
As your small business continues to grow, you will likely need to purchase more coverage to compensate for the increased risk of serving more customers, purchasing more commercial property, and hiring more employees.
Other Types of Small Business Insurance
General liability insurance is a must for any small business that operates out of a physical location and frequently works with customers or clients. However, liability insurance is only one of the necessary small businesses coverages.
To ensure your business is fully protected against a variety of common risks, you may also consider purchasing the following small business coverages:
- Professional liability insurance
- Workers’ compensation insurance
- Cyber liability insurance
- Commercial umbrella insurance
- Commercial flood insurance
- Commercial auto insurance
- Commercial property insurance
Depending on your industry and risk factors, you may need other specialty coverages, such as builder’s risk insurance for construction businesses or restaurant and bar insurance for hospitality businesses.
Request a Quote
Small business liability insurance helps cover the costs that can arise if a customer sues your business over a bodily injury, property injury, libel, slander, or copyright infringement.
At KSA Insurance, we work with small businesses in South Carolina and across the southeastern United States to help them find affordable general liability insurance policies that protect them against a wide range of common risks.
Contact us today to request a quote and learn more about how much liability insurance costs for small businesses in South Carolina.
