How much does general liability insurance cost?

General liability insurance protects your business from claims that involve injury or property damage. Most small business owners pay around $45 to $80 per month for general liability insurance. The cost can vary, though, depending on your provider, how much coverage you select, and the industry you operate in. A consultant who works from home may have low premiums, for instance, while a contractor who works on customers' property might pay a lot more. If you're looking for general liability insurance, compare quotes from multiple providers to find a plan that best fits your business needs and budget. 

How much does general liability insurance cost?

Most small businesses pay roughly $45 to $80 per month, or about $500 to $1,000 per year, for a standard $1 million general liability policy. That price may be higher or lower based on factors like your industry, location, revenue, and coverage limits. 

Here are the average general liability insurance prices among major providers and marketplaces:

As you're researching the cost of general liability insurance, you'll see a range of figures among providers. This is because providers are generally basing their numbers on their own customer base. Plus, some publish average costs, while others provide median costs or minimum rates. 

While all these figures can be useful benchmarks, they're not substitutes for getting your own personalized quote. 

How much does a $1 million general liability policy cost?

A general liability policy with $1 million in coverage typically costs about $45 to $80 per month for small businesses. Insurance policies often have two numbers describing their coverage: 

• Per occurrence limit: This is the most an insurer will pay toward a single claim. 
• Aggregate limit: This is the most an insurer will pay in total across the policy year. 

Some insurers offer $1 million/$1 million policies, which have both a $1 million per-occurrence limit and a $1 million aggregate limit. A more common coverage structure is $1 million/$2 million, with a $1 million per-occurrence limit and a $2 million aggregate. 

Choosing a higher aggregate limit may cost less than you think. Insureon, for example, reports that its $1 million/$2 million customers pay an average of $45 per month, while its $2 million/$4 million customers pay $46 per month, only $1 more. 

Bumping up your coverage may only add modestly to your monthly premium, since many claims never approach these high limits. 

General liability insurance cost by industry

The industry your small business operates in can affect the cost of general liability insurance. Businesses with a higher risk of causing third-party injuries or property damage, like contractors and roofers, usually pay more than lower-risk businesses like consultants. 

Insureon provides the median premiums among its small business customers across different industries. 

Insurance companies rely on classification codes for reference when determining the premiums for liability insurance. General liability class codes group businesses by industry, such as construction businesses or professional service businesses. 

Even if two businesses share similar revenue or payroll numbers, they may have very different premiums based on their industry and class code. A consultant who works on their laptop at home may pay a lot less than a roofer who has a greater chance of causing an injury or damaging someone's property. 

Contractors face some of the highest costs when it comes to general liability insurance, though rates can vary based on the specific trade and use of subcontractors. According to Insureon, contractors typically pay around $162 per month, and 92% of its construction customers choose a plan with $1 million/$2 million coverage. 

How much does general liability insurance cost by state?

The area where your business operates also impacts how much general liability insurance costs. Insurance providers consider factors like local claim frequency, court costs, and population density when setting premiums. 

States with higher claim frequencies and court costs, as well as denser populations, tend to have higher costs. Less populous areas with lower court costs may fall toward the less expensive end. 

Here are some states that typically fall on the lower and higher end for insurance premiums: 

The typical national rate ranges from around $45 to $80, but there's a good deal of variability. Keep in mind that premiums and state rankings can shift from year to year, so it's always important to compare current quotes within your state. 

Which factors determine your general liability premium?

Insurance companies look at a variety of factors when putting together your rate. These factors include: 

• Industry and class code: Businesses that involve physical labor, customer property, or heavy equipment often pay more than home- or office-based businesses. You may also have a higher premium if your business has a lot of customer foot traffic. 
• Annual revenue and payroll: Insurers examine your annual revenue and payroll when putting together your offer. A higher revenue can mean you have more customers and projects, while a larger payroll indicates more employees. You may pay higher premiums as these numbers grow. 
• Location: Areas with a greater population density, higher property values, and higher court costs tend to mean more costly insurance premiums. 
• Number of employees: More employees can mean more opportunities for accidents or property damage, which can lead to higher liability insurance premiums.
• Coverage limits and deductible: As with any insurance plan, you'll pay more for higher coverage limits or a lower deductible. Compare your options to find a plan that fits your needs and budget. 
• Claims history: If your business has prior liability claims, you might pay more than a business with no history of claims. 
• Years in business: An established company with safety procedures in place may get better rates than a brand-new business. 

Note that insurers may adjust your premiums at the end of your policy period. Your rates are based on an estimate of projected revenue and payroll. If an audit reveals that your actual figures have changed, the insurer may ask you to pay more or offer a refund or credit, depending on the policy. 

Many business owners wonder if forming an LLC lowers the price of general liability insurance, but it does not. Nor do you need to form an LLC to purchase coverage, as this insurance is open to sole proprietors, partnerships, and other business structures. 

How to lower your general liability cost

There are several steps you can take that may lower the cost of your general liability insurance plan: 

• Shop around: Compare quotes from several insurance providers to find your best offer. 
• Consider a business owner's policy: This type of policy bundles general liability insurance with commercial property coverage. Bundling plans may cost less than purchasing two plans separately. 
• Pay annually instead of monthly: You might get a discount if you pay the annual premium in full rather than making monthly payments. 
• Choose your limits and deductible carefully: Consider how much coverage your business needs so you're not overpaying for a plan. A higher deductible can reduce your premiums, but only choose an amount your business can afford to pay. 
• Review revenue and payroll estimates: Give the insurance company accurate projections so you're less likely to face charges after a premium audit. 
• Reduce risks in the workplace: Employee training and safety procedures can help reduce injuries and property damage. Avoiding claims can help you get lower costs on an insurance plan. 

How general liability costs compare to other business insurance

General liability insurance tends to be more affordable than other forms of business insurance. Here are the typical monthly costs for different types of policies: 

Note that a business owner's policy combines general liability insurance with commercial property coverage, so that $80 monthly premium includes both policies. Professional liability may cost slightly less than general liability. These plans can protect against client claims of inadequate work or negligence. 

Your small business may need several insurance policies for protection against different risks. Understanding the common mistakes when buying business insurance and comparing personal and business insurance can help you make an informed choice. 

The bottom line

Most small businesses pay about $45 to $80 per month, or around $500 to $1,000 per year, for general liability insurance. However, your individual costs will depend on various factors, including your industry, revenue, location, time in business, and history of claims. You can also choose between different levels of coverage and deductibles to find a plan that's affordable and meets your needs. Before picking a plan, compare quotes from multiple providers to find the best combination of cost and coverage for your business. 

Frequently asked questions