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If you’re currently running a small business, you’re likely working on cutting costs in at least a few processes, tasks, or essential supplies as we speak. Suggesting that you enroll in business liability insurance may be a bit of a tough pitch—after all, adding expenses to the budget seems counterintuitive when you’re striving to cut back. But if you’re looking to save money, enrolling in a cheap business liability insurance plan could save you a lot of money down the line.
We’ll teach you exactly how to approach finding coverage that will save you money while requiring the lowest possible monthly payment from you in the meantime. And if you already have insurance, you’re in luck. The steps we propose in this article can also help you find an even cheaper alternative to your current coverage.
What is business liability insurance?
Business owners enrolled in general liability insurance receive protection against lawsuits pertaining to bodily injury, property damage, copyright infringement, advertising injury, and reputational harm. These are claims that business owners in any industry are vulnerable to. If you interact with clients or customers, have an office or storefront, or provide a product or service, you could be at risk of being sued.
In the event that you’re involved in a lawsuit and you’re uninsured, it may be too late to get the help that you need to keep your business afloat. This could result in you paying huge legal or medical fees out of pocket, and maybe even your business going bankrupt. Investing in liability insurance now could help you maintain your financial security through a lawsuit.
Understanding the cost of business liability insurance
The average small business pays around $43 a month or $516 a year for their general business liability insurance. However, there are others who pay more or less than this amount, and there are ways you can strategically lower your monthly premium.
The exact cost of your monthly business liability insurance premium will depend on a number of factors. For example, the industry in which you work may be deemed high risk by an insurance company—contractors and construction workers, cleaning service providers, and those working in the food and beverage industry, for example. You may also want to have a higher-than-average policy coverage limit. Both of these are examples of things that would increase the amount you would be charged.
If your business has an established history of being sued multiple times, this will also increase the price of your premium when enrolling in a new plan.
Steps for finding cheap business liability insurance
There’s a great amount of variance in the price of different types of insurance. If you’re looking to lower the monthly cost of your existing business liability insurance, or want to find the cheapest possible premium for your very first liability policy, there are a number of ways to achieve this money-saving goal. Take these five steps to ensure you’re not paying even a penny more than you absolutely need to:
- Request quotes from multiple providers: No two insurance quotes will look the same, so making sure you’re getting the exact coverage you need is essential—but it’s also important to make sure you’re not paying more than you need to. Reach out to several providers to compare coverage and bottom line. You also have options that allow you to reduce the leg work you’re doing. Online tools like Simply Business allow you to quickly get affordable business insurance quotes from different providers simultaneously. If you prefer the human touch, working with a commercial business insurance agent you trust will get you this information in a more personable way.
- Compare costs between individual policies and bundled policies: Business owners often require liability insurance in addition to other policies. By bundling these into a business owner’s policy, or BOP, you’re able to get all the protection you need with one reduced payment. Speak directly to the insurance providers you’re considering or with your commercial insurance agent about bundling options.
- Customize policies to reduce costs: The price of your policy is typically related to the extent of your coverage. To reduce costs, work with your provider to identify areas where you can scale back your margins to save cash. This could mean adjusting the value your property is assessed at, reducing the limit of your policy, or opting for an increased deductible.
- Pay annually instead of monthly: While it may not save you a ton, you’ll often be able to spend less money by making one annual payment instead of 12 monthly payments. Talk to your provider to see whether this is an option for you, and identify how much it’d shave off your bottom line.
- Good risk management: While many factors that determine your premium cost are out of your hands—for example, the risk of your industry or your property value—you can work to reduce risk in other ways. By training employees well, implementing procedures that reduce error, and limiting accidents by maintaining property and machinery, you’ll have fewer claims and cheaper premiums.
If you’re looking for other ways to reduce premium costs, talk with your insurance provider to see if they can make additional recommendations for your unique circumstances.
What are the requirements for affordable business insurance?
Although most states do not require liability insurance by law, there are a number of benefits to having it. Most notably, many clients and corporations will only work with businesses that are enrolled with general liability insurance—it shows that a company’s finances are stable and that the business is reliable.
No one wants to overpay for their coverage—and while affordability is important, be sure you’re not prioritizing reducing costs over the safety and financial stability of your business. Generally, small businesses elect to enroll in a policy with a $1 million occurrence limit, meaning insurance will cover up to that amount in an individual claim, and a $2 million aggregate limit, meaning the insurance will cover that amount in a given year. If you feel your business poses lower risk, you can opt for a lower limit.
In order to enroll in cheap business liability insurance (or a policy at any price point), you’ll need to provide your insurer with documentation that illustrates your annual revenue, information about the size of your business and how long you’ve owned it, your claims history, and other information the company requires in order to determine whether or not they’re able to insure you, and if so, at what cost. Again, most insurance brokers or commercial insurance agents will be able to make recommendations on how you can lower your monthly costs while still protecting your business.
Committing to protective measures can sometimes feel like pouring money down the drain, but enrolling in even the cheapest business liability insurance plan will expand your business and ensure the security of your finances well into the future—no matter what accidents creep up along the way.