As a small business owner, you know that even the most innocent mistakes can put you in serious financial turmoil if you aren’t well prepared and protected. Customers slipping and falling in your place of business, an employee misspeaking at the wrong place or time, or unintentionally causing damage to a customer’s home while doing routine work are just a few examples of ways small business owners can lose their financial footing without a general liability insurance policy.
If you know the importance of being well protected, you’re likely taking steps to get the coverage you need, but finding and enrolling in the right policy can be a daunting task if you’ve never had to do it before. Below, we’ll cover everything you need to know about how to get general liability insurance for your business—and even better, we’ll break it down into five easy steps.
What is general liability insurance and why does my business need it?
To put it simply, general liability insurance protects business owners against legal claims relating to bodily injury, property damage, libel, defamation, and slander made by third-party individuals—that is, your customers, clients, or collaborators.
The specific types of claims a business is likely to file, as well as the risk of them encountering legal trouble in the first place, varies considerably based on the type of business you run. Perhaps you design or distribute a product and a customer is injured or otherwise harmed by it. Maybe you run an office and a client is injured while on site for a meeting. Or maybe your business requires you to be on people’s properties—such as a professional cleaner, landscape artist, or general contractor—and either you or an employee inadvertently damages their property.
No matter what kind of work you do, the majority of small businesses that work with customers and rent or own commercial or office space need a general liability policy. That way, when an accident or incident happens, you’re covered for any medical or legal expenses you’re deemed responsible for. In fact, many client contracts specifically require businesses they intend to work with to have this insurance—it’s that foundational. By waiting until you’re in trouble to look for coverage, you’ll end up paying far more out of pocket, potentially even leaving your business bankrupt.
How to get general liability insurance
When you’ve decided you’re ready to get general liability insurance for your business, you may feel unsure where to begin. If you’ve only ever handled insurance for yourself and your personal assets, the broader scope of your business may seem difficult to undertake.
But fear not—the process is actually pretty similar to shopping for personal insurance. We’ll break it all down into simple steps to make sure you feel well informed and prepared at every point.
1. Evaluate the risk your business poses
Some types of businesses are more or less risky than others. Being aware of the kinds of risks you’re most likely to encounter in your line of work, and having an estimate of the costs of these lawsuits should they come up, is a good starting point. According to a premium survey done by Insureon, the most costly premiums are for businesses in the construction and contracting, cleaning services, landscaping, and food and beverage industries. Knowing this will help you understand the best insurance plan for your business.
2. Find an expert you trust
It can be challenging to find the best rates and understand the details of insurance policies on your own. Seeking guidance from a trusted commercial insurance agent can give you insight you wouldn’t otherwise have. They aren’t affiliated with any individual insurance company, but receive a commission when they sell policies, meaning they’re perfectly situated to provide unbiased insight into which plan will best suit your budget and needs.
3. Gather quotes
Once you and your agent know exactly what your risks and priorities are, identify what kind of plan is best for you. From there, they’ll assist you in gathering quotes from the insurance companies you’ve identified as top contenders for evaluation. At this point, you’ll see exactly what the coverage and cost of each plan is for your business.
4. Evaluate and ask questions
Now comes the hard part—deciding which option is the best fit for you! Evaluate each option with your business risks in mind to get a clear picture of what your business really needs. Prices and offerings can dramatically vary between plans, but remember: this isn’t the moment to opt for the cheapest option. Make sure you understand each policy clearly and ask a lot of questions. One of the benefits of working with a commercial insurance agent is that their expertise will allow you to make as informed a decision as you possibly can.
5. Enroll and assess annually
Once you’re sure which plan is the right one for you, work with your agent to enroll. They’ll walk you through each step. Aside from providing documentation about you and your business, this step should be relatively easy. Once you’re covered, work an annual revaluation into your calendar—as a business grows, so do their liabilities. Staying current will benefit you in the long run.
General liability insurance requirements
Once you understand how to get general liability insurance, it’s time to enroll. In order to enroll in this type of insurance, you’ll need to provide your insurance company with some information and documentation related to your business, including:
- Documentation illustrating how long you’ve owned your business
- An estimate of your business’s revenue for the coming year
- A description of what your business does
- Where your business is located and if that location is owned or rented
- Number of employees
This information will give your provider a complete picture of your business, so they can determine what level of insurance to offer and at what cost.
How much does small business liability insurance cost?
While insurance costs vary, depending on a few factors, small businesses generally pay between $40 and $50 each month, or $480 to $600 annually. The most common coverage for this rate is a $1 million per-occurrence limit, meaning the insurer will cover up to that amount in any individual claim, with a $2 million aggregate limit, meaning the insurer will cover up to that amount per year. While this is the most common policy—over 90% of businesses covered by Insureon chose this coverage—around 5% opted for $2 million/$4 million limits instead due to their business type.
Now that you know how to get general liability insurance, keep in mind that there’s no one right policy for all business owners. That said, prioritizing financial safety is a great decision no matter what line of work you’re in. Consult with insurance professionals to find the perfect policy for your needs, and work with NorthOne to continue making the best financial decisions for your business. We specialize in providing the best small business banking solutions for owners’ unique needs and are ready to help get you where you want to be. Visit us online to learn more.