How Much Does Small Business Liabilities Insurance Cost?

How Much Does Small Business Liabilities Insurance Cost?

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small business liabilities insurance

Every small business needs to at least consider getting business liabilities insurance. Why? Because if there is a claim, and you don’t have it, you could very easily lose your entire company! We will discuss what it is first, and then we will try to get an an idea of the prices.

Like all types of insurance, liability insurance for a business is designed to protect you from major, unexpected expenses. I always like to use an example, so let’s try this with a landscaping company.

Jim owns ABC Landscaping, LLC. He has 3 crews cutting grass and trimming bushes, with a total of 15 employees.

Let’s say that Jim’s employee named Tim accidentally runs a lawnmower over a grandma that was sunbathing beside a bush. Grandma is really hurt, Tim is “freaked out”, and ABC Landscaping is about to get hit with a potentially large lawsuit that could easily cost $100,000 or more in legal fees and damages for grandma.

If Tim didn’t have any liability insurance, his company is in a lot of trouble. He is looking at hiring am attorney ($$), and coughing up a big chunk of cash when his expensive lawyer settles with grandma’s lawyer ($$$$). Unless ABC Landscaping is sitting on a pile of cash, Tim could be forced to sell all of his equipment to pay the bill.

Now let’s say that Tim was smart enough to purchase small business liabilities insurance years ago. He has a good policy that covers his company for up to $1,000,000 for any claims that are due to his employees’ negligence. In this scenario, ABC Landscaping should survive this tragedy. The insurance company will likely cover all of the medical and settlement bills, minus a deductible. Grandma’s leg isn’t going to grow back, but ABC will go on to cut yards another day.

Do you see the importance of having this coverage for every small business? It’s really, really important to have. If you want to avoid getting shut down for a mistake, you just have to have this coverage in today’s litigious society!

Now that we know what small business liabilities insurance coverage is, let’s talk about how much it costs.

The price for this protection is going to depend upon:

  • What type of business you have. You can expect to pay more if you run a dynamite packing company, and less if you run a pen supply shop.
  • The insurance company that you choose. Some insurers may cost a little more, but remember that sometimes you get what you pay for. It’s crucial that you end up with a reliable company that will be there when you have to file a claim one day. On the flip side, it’s also important to shop around for the best deal. Get as many quotes from as many companies as you can!
  • What your policy covers. You can get really cheap business insurance for as little as $0 a month for a small business, but it may not cover every type of accident. You can also spend a lot more on a broad general liability policy that covers bodily injury, property damage, and even personal injuries.
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George is an avid writer who covers a wide variety of topics for several online publications. When he's not writing, you can usually find George fishing, playing with his kids, or trying to be a better husband with his wife.

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