General Liability Insurance is usually cheap, 95% of business owners pay *less than* $50 a month, and only 1% pay over $100 1 . 7 factors can greatly influence how much you'll have to pay for general liability insurance.
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1. Industry Affects your General Liability Insurance Premium
Some industries have higher risks than others so insurance premiums can vary accordingly. Construction & healthcare businesses have higher premiums than consulting and retail businesses.
These 7 industries are commonly associated with the highest level of risk.
- Financial Services - market volatility, regulatory changes, credit risk
- Oil & Gas - risks related to oil prices, geopolitical instability, environmental concerns
- Construction - project delays, cost overruns, safety hazards, & legal disputes
- Pharmaceuticals & Biotechnology - high research & development costs, regulatory challenges, patent expiration risks, and the uncertainty of clinical trials
- Technology & Startups - tech advancements, fierce competition, IP disputes, cybersecurity threats, & market volatility contribute to the industry's risk profile.
- Airlines and Transportation - risks associated with fuel price fluctuations, geopolitical events, safety concerns, natural disasters, and regulatory compliance.
- Mining - Mining operations involve geological uncertainties, commodity price fluctuations, environmental impact, labor disputes, and regulatory compliance challenges
- Utilities - tend to have stable demand, are regulated, & enjoy consistent cash flows
- Healthcare - benefits from the constant demand for medical services and products
- Government & Public Admin. - U.S & Maryland are associated with lower risks
- Education - education tends to maintain a relatively stable demand over time
- Insurance - Insurance itself is a risk mitigation tool
- Food & Beverage - their production & distribution tend to have stable demand patterns
- Consumer Staples - in demand regardless of economic conditions, making the industry less susceptible to economic downturns
2. Size & Revenue of your Business Increase General Liability Insurance Costs
Generally, larger businesses with higher revenue pay higher premiums because they typically have greater liability exposure.
larger businesses typically have more operations, employees, and assets, which can increase potential risks and liabilities associated with their operations. Insurance providers may charge higher premiums to account for the increased coverage needed.
If you are here because your premium increased after years of good business, that's normal. Revenue is used as an indicator of financial capacity. Insurance providers identify revenue as a factor because it correlates to resources, the higher revenue a business has the more capable it is of handling claims which may result in higher premiums.
3. The Coverage Limits you Choose
More coverage means more premiums. It's important to find the right balance between adequate coverage and affordability.
Always *consider opting out of optional coverages:
- Umbrella Liability Insurance
- Professional Liability Insurance (Errors and Omissions Insurance)
- Cyber Liability Insurance
- Employment Practices Liability Insurance (EPLI)
- Product Liability Insurance
- Where your Business is Located
4. Location! Location!! Location!!!
Geography matters! Local laws, legal climate, and claim frequency in the area will impact insurance rates. A summertime business in Ocean City probably has a higher general liability rate than Jarrettsville, Maryland.
5. How Many Claims are Too Many? GL Insurance Premium Increased?
There are reports of providers canceling coverage after 2 claims in a policy term. Insurance providers have alerts for claims history, If you had frequent claims or even a costly settlement it may result in higher premiums or cancellation. One Redditor said the major insurance providers blacklist "high-risk" applicants together.
6. Risk Management Practices Reduce General Liability Insurance Costs
Insurance providers evaluate your risk management practices. Having strong risk management strategies, safety protocols, and employee training programs can lead to lower premiums.
You could begin regular safety inspections, employee training on safety protocols, implementing proper security measures, and maintaining compliance with laws and regulations. By addressing risks proactively you can reduce the likelihood of accidents, injuries, or property damage which can translate to lower insurance premiums.
Some insurance companies offer risk management services and resources as part of their policies.
7. The Policy Deductible
The deductible is the amount you agree to pay before your insurance coverage kicks in. Generally, choosing a higher deductible can result in lower premiums, but remember that you'll be responsible for a larger portion of claims and that's not unique to General liability insurance that applies to all types of insurance.
Remember, these factors can vary between insurance providers.
1 Hiscox small business survey hiscox.com/small-business-insurance/general-liability-insurance/general-liability-insurance-cost