What is the cost of commercial general liability insurance?
The cost of CGL insurance is lower than many business owners think. Only about 13 percent of small businesses pay more than $1,000 a year in insurance premiums.
Your products or services must be priced high enough to cover the insurance premiums. Keep in mind that informing customers that your business is properly insured not only eases their concerns in the event of a loss but also improves the reputation of your company, according to Allstate agent Julie Jakubek.
So she recommends at least $1 million in liability coverage, which is standard in the industry and doesn’t cost much more than $300,000 of liability coverage. When a company’s revenue exceeds $500,000, Jakubek recommends purchasing a more comprehensive policy. When additional liability coverage is needed, a separate business umbrella policy can be purchased.
However, while commercial general liability insurance can be purchased on its own, keep in mind that it is frequently included as part of a business owner’s policy (BOP), which typically covers business personal property as well as interruption of business and liability in a single policy at a lower cost than if these coverages were purchased separately.
Customers and suppliers may mention in their contracts that you have CGL insurance in place even though the law does not demand it.
- How much would it cost to not have CGL coverage?
The moral of the story is explained by Jesse Zook, owner of MaidPro Southeast Pennsylvania.
If you don’t have adequate general liability insurance, you could lose everything you’ve worked so hard to build up your business. Even if your corporation limits your liability and thus protects you from personal financial losses, your investment in the business and the assets of the company are still at risk,” said Zook.
Startups and small businesses may believe they have nothing to lose and that the expense isn’t justified. Nevertheless, Zook added, “the cost of CGL insurance scales with the size of your business and is likely to be inexpensive for an early-stage company”.
You shouldn’t expect a comprehensive insurance plan.
Many small businesses make the blunder of believing their CGL policy to be a blanket of protection.
Many small business owners also learn the hard way that CGL does not apply to themselves or their employees, for example:
- injure oneself while working;
- traffic collisions;
- injuring or stealing from your property;
- impact of pollution
- other forms of abuse and discrimination against women
According to Huddleston, the CGL does not cover workers’ compensation claims. “Instead, a commercial automobile policy would cover claims relating to vehicles, including negligent entrustment.
CGL policies do not cover damage to or theft of your property, but commercial property policies do. Professional liability claims and pollution claims, such as when a toxic substance from your product causes bodily harm to consumers, are also excluded from CGL policies. This does not include claims of sexual harassment and other forms of discrimination in the workplace, for example.
You’ll need professional liability insurance to protect yourself from the risk of mistakes or neglect on the part of your employees, which CGL does not provide.
Additional coverage may be required for custody and control. To illustrate the point, imagine you’re working as an interior decorator and you’re about to drop an expensive vase belonging to a client. As far as Jakubek is concerned, the vase may not be covered because it was in your care, custody, and control. CGL would most likely cover the vase if you trip over a cord and it breaks because of that.
