What Level of General Liability Insurance is Right for Your Business?
Small
business owners are always on a tight budget, and when it comes to insurance, a
lot of owners will overpay. It’s smart to take out more insurance than you need
to an extent. If you have the highest limits, you’re paying for
insurance that you’ll never actually use.
If you’re a
professional, such as an IT professional, you’ll want two types of main
insurance:
- General
Liability Insurance - Professional
Liability Insurance
Both of
these insurance options offer a strong foundation for tech startups, doctors,
veterinarians and other business professionals.
Insurance Depends on Your Business
Risk is the
ultimate factor in determining how much general liability insurance your
business really needs. A lot of businesses will do a quick inventory of their
team to better understand the risks that the team faces.
Of course,
you don’t know all of the risks that you’ll face because there will always be
unknowns in business.
A few of the
considerations are:
- Employee experience
- Business locations
- Number of employees
- Size of business
- Type of business
- Customers
A licensed
agent is the best source of information to determine your business’ needs. The
agent will be able to help you determine what coverage you need and what
coverage you can avoid. A basic policy may not be enough for your business, and
this is where “endorsements” can be added.
These
endorsements are essentially policy add-ons that cover any gaps that you may
have in your insurance.
General
liability insurance should be no less than $1 million for bodily injuries and
property damage. You should also have $1 million in coverage for:
- Personal injury liability
- Advertising liability
- Products
- Completed projects
You will
also want to consider $2 million general aggregate coverage. Again, riskier
business types will demand higher policy limits. An insurance agent will be
able to walk you through the entire process to help you better find a policy
limit that meets your needs.
General
liability insurance is the basic insurance that you must have.
Expected Costs for General Liability Insurance
Liability
risks are different depending on the industry that you’re working in. You’ll
find that the IT field has costs that can be:
- $500 to $900 annually if you’re a contractor or a small
firm with just a few employees - $3,500+ per year for an IT firm with 20 to 50
employees
If you have
a robust operation, you’ll likely have an easier time paying for your insurance
than a small business owner.
Professional
liability insurance will cost most freelancers and contractors $1,000 to $1,500
per year. Large firms that bring in over 10 million a year will often pay
$14,000 or more annually for their insurance. Small firms can expect to pay
$2,500 to $5,000 per year.
On the
low-end, you’ll be paying between $1,500 and $2,400 a year for general
liability insurance and professional liability insurance.
Working with
a broker like brokerlink.ca will lead to additional savings.
Brokers will
be able to receive quotes from multiple insurance companies and help you find
the best rate for your business.
