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Breaking Down Commercial General Liability Insurance Costs

Author: Kimberlee | January 16, 2025

Edited by: Kimberlee and Reviewed: Kimberlee

General liability is the primary policy most small business owners get to protect them against third-party claims that can cost thousands of dollars or more. The cost of the general liability policy is contingent on several factors and will be different for every business. This article will go through the cost factors that include coverage and explain how a small business owner can save on premiums. 

Overview of Commercial General Liability Insurance

General liability insurance is a type of insurance policy that covers third-party claims where something happens accidentally due to business operations. You may have someone slip and fall on the property and get hurt, leading to medical costs. Or you can have something fall from your work truck that damages a client’s car. Both of these are examples of general liability claims. 

Typical Costs of Commercial General Liability Insurance

The average cost of a general liability policy for a small business is $42 per month or approximately $500 per year. The cost will vary based on several factors. Industry and size are two significant factors for general liability costs.

For example, according to The Hartford, the following cost differences exist.

IndustryAverage Annual Premium
Business Consulting$780
Accountants$675
Engineering$595
Retail Stores$696
Restaurants$2,408
Manufacturers$651
Photographers$437

Factors Influencing Commercial General Liability Insurance Costs

The factors that affect general liability costs include: 

  • Business size: The larger the company, the more revenue it generates and the more of a target it is for a larger claim. Plus, more revenues means you do more business and are at a higher risk for a claim to occur based on the law of large numbers. 
  • Business type: Some industries are riskier than others and have a higher chance of an accident happening. For example, restaurants are at a high risk because there may be spilled liquid on the floor that people can slip on. 
  • Coverage limits and deductibles: The higher your coverage limits are, the more your policy will cost. A higher deductible will, however, lower the premium because you are taking on more risk yourself. 
  • Business location: Some geographic areas are well known as being litigious places where people will sue at the drop of a hat. These areas will be costlier than others. General liability costs across state lines vary. 
  • Claims history: A company free from claims will pay less than a company that has claims. Having one claim increases the chances of having a second and third claim. 
  • Risk management practices: If a small business implements risk management practices, they may get a discount on the policy because they are mitigating the risk of a claim.  

How to Reduce Commercial General Liability Insurance Costs

To reduce the cost of general liability insurance, shop the policy around with several carriers. Be sure to compare policies with the same amount of coverage to ensure you are comparing apples-to-apples. Ask the insurance agent about bundling the policy with other small business policies, such as workers’ compensation. Some carriers offer a discount for doing so. And implement risk management protocols. This may mean putting up signs after mopping that the floor is wet or having employees go through a safety meeting once a month. These can lead to discounts on general liability insurance and other policies. 

Additional Considerations

Here are some additional considerations to look at. 

Understanding Policy Exclusions

Ask your agent about policy exclusions so you understand what is covered and what isn’t. You may need complementing policies to cover things like commercial property or workers’ compensation. Find out what policies you need from your agent. 

The Role of an Insurance Agent or Broker

An insurance agent or broker is there to be a risk management partner. They are there to help you identify what policies you need, how much coverage you need, establish any discounts you are eligible for, and help you implement safety programs that reduce claims risk. A good agent will take the time to understand your business, what it does, and the common risks involved. 

Frequently Asked Questions (FAQs)

What Is Commercial General Liability Insurance?

Commercial general liability insurance is a business policy that pays claims when an accident arises for third-party individuals. Most commonly, it covers slip-and-fall accidents. 

How Can I Lower My Business’s Insurance Costs?

You can lower business insurance costs by shopping rates around, implementing safety programs, and reducing the number of claims you have. Also, be sure to ask for discounts you might be eligible for. 

What Factors Most Significantly Affect CGL Insurance Premiums?

The factors that most significantly affect CGL premiums include the size and industry of your company, coverage limits, deductibles, location, and claims history. 

The Smart Approach to Lowering General Liability Insurance Costs

To lower general liability insurance costs, work with a company that understands your business and its risks. Don’t be afraid to shop the policy around and compare prices with several different companies. You may find that a business owners policy may save you money and get you more coverage. Don’t hesitate to check out our services page for more information about getting a Policy Ape recommended policy.   

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