Business liability insurance, sometimes referred to as "commercial general business liability insurance," safeguards a company's assets in the case of a lawsuit stemming from injury or damage caused by the business, business owner or business' employees. Its safeguard is provided in the form of financial payments for any settlement or award levied against the business, legal defense fees, and other expenses affiliated with a lawsuit.
How Rates Are Determined
According to the U.S. Small Business Administration (SBA), a business' insurance needs depend on the type of business and perceived risk associated with the business' operation, meaning the product it sells or service it provides. Essentially, the higher the risk, the more coverage is needed. Higher coverage levels mean higher premium rates.
Typical Insurance Rates
Because of the specific analysis involved in determining how much coverage is needed, there is no such thing as a "typical rate" for business liability insurance. According to the SBA, annual premiums for business liability insurance coverage can range from $750-$2,000. The exact cost depends on coverage needs and the type of business.
Rates are determined by individual insurers after a risk assessment.
- The number of years the company has been in operation
- Number of employees
- Past claims
Every insurance company considers different factors when drawing up a rate quote.
Type of Coverage
Rates additionally depend on the type of coverage sought. Business liability insurance is a general category for different types of policies, such as disability insurance, commercial auto insurance, and general liability insurance. A business seeking more than one type of policy may pay more merely due to purchasing multiple forms of coverage. However, some insurance companies might offer a discount for purchasing multiple policies.
Reputable Insurance Companies
Although many insurance companies offer business liability insurance, some companies are more reputable than others. Recently, Insure.com made available Standard and Poor's ratings for insurance companies.
Standard and Poor, which provides ratings and rankings for companies in the insurance industry, assigns letter grades to insurers based on their ability to meet financial obligations. These ratings range from AAA which indicates a company with an extremely strong capacity to meet financial commitments, to D, which indicates a company currently in default on financial obligations.
Several insurance companies that offer business liability insurance are highly ranked. Included among these companies are:
- Nationwide: This company was ranked an A+. It offers general business liability insurance that provides professional liability, products liability, and fire liability coverage.
- Geico: This company's business general liability insurance covers property damage, medical payments, bodily injury, and defense costs. The company is rated AA+.
- State Farm: This insurer is ranked AA and offers business property and liability insurance policies. Coverage features differ depending on the type of business, but may include loss of income, comprehensive general liability, equipment breakdown, and physical loss to the business due to flooding.
- Farmers Insurance: This company is ranked an A+. It offers a business liability insurance policy that provides coverage for a business' premises and operations, products, completed operations, and employment practices.
Each of these companies' websites offer users the ability to obtain a quote online or to connect with a local agent to obtain a rate quote.
How to Obtain the Best Coverage and Rates
The SBA provides advice to business owners about how to purchase a business insurance policy. To find the best coverage and rates, the agency recommends shopping around and obtaining assistance from a reputable, licensed agent. Shopping around allows you to compare policy coverage and rates to obtain the best ones suitable for a business. Additionally, an agent may be able to provide you with better rates and coverage types, since he or she will assess your business' needs prior to searching for policies.