The cornerstone of any insurance protection a business needs is general liability insurance. It should be the first protection option you evaluate. General liability insurance should always be part of your insurance portfolio, regardless of whether your company is a sole proprietorship or an established corporation.
The price of general liability insurance varies depending on several variables. You should evaluate the risks associated with the particular business and industry to make an informed choice and then find the insurance that best suits your needs and concerns.
LLC Liability Insurance Pricing
An LLC liability insurance policy typically costs between $300 and $1,000 per year, but different types of organizations will require additional coverage and face various risks. Among the variables that affect premiums are:
- Risk exposure. Some businesses are more risk-prone than others
- Generally determined by zip code
- Annual salary paid. How many people are employed
- Total upper limit. Amount of coverage payable per policy period
The amounts listed above are simply estimates. Ideally, request an estimate from an insurance agent if you want to know exactly how much general liability insurance would cost for your LLC.
Why do I need insurance for my LLC?
LLC owners, also known as partners, sometimes believe that their business structure protects them from losses, and in some cases, they are right. Being an LLC allows you to keep your personal and professional assets separate.
Your savings will be safe if a client brings a lawsuit against the firm and wins. But the firm’s assets are not safe. Imagine a major client of yours alleges that a mistake you made cost thousands of dollars.
Whether wrong or not, you must defend yourself and may be required to pay a settlement or judgment. The expense will come from your company’s funds if you do not have liability insurance to cover these expenses.
Factors that influence the price of insurance
If a third party or property is damaged during the normal course of business, general liability insurance can help protect your business. The following factors can affect the price of this commercial insurance policy:
The industry in which you perform
Your general liability insurance premiums will likely increase the riskier the industry in which your business operates. A web designer working from home is less likely to suffer slip and fall claims than a retail store with numerous storefronts because there are more potential locations for such mishaps.
Because they handle customer property, home cleaning companies are more likely to face property damage claims than art galleries.
Your claims history
Insurers may view you as a higher risk and charge you higher rates to cover those potential future costs if your company has recently been sued several times for destroying customers’ property and if you have filed claims to help pay for those losses.
The range of the policy you have
A per-incident limit of $1 million and an aggregate limit of $2 million are the usual limits for general liability insurance plans. In other words, the insurer will pay up to $1 million for each claim filed but will never pay more than $2 million in a year.
Higher limits will result in higher premiums, while smaller plans tend to have lower premiums. In general, lower premiums are associated with higher deductibles.
How big your company is
From an insurance standpoint, every worker in your company poses a risk. For example, the more drivers a delivery service employs, the greater the risk of accidents for those drivers.
Therefore, as your company expands, so should your general liability coverage, which could increase the policy’s price.