How much does a $1 million liability insurance policy cost?
What is a $1 million liability insurance policy?
A $1 million general liability policy protects your small business for up to $1 million for a covered loss or damage. Costs exceeding limit must be paid out of pocket by the business owner.
$1 million in general liability coverage isn't right for every small business; some will need higher or lower limits depending on their risk factors.
Businesses with more significant daily risks opt for higher coverage, such as a $2 million liability policy. Others opt for less, such as $500,000 in coverage.
Because legal fees, medical bills, and property damage can prove extremely costly, a majority of small business owners pick higher policy limits.
Lower premiums are tempting because you'll save on monthly business insurance costs. However, having the right coverage for your risk factors is crucial to avoid paying a significant amount out of pocket in the event of an exceptionally expensive incident.
Most (85%) of TechInsurance customers choose a general liability insurance policy with $1 million / $2 million limits.
This means:
- $1 million per-occurrence limit. While the policy is active, your insurance provider will pay up to $1 million per claim.
- $2 million aggregate limit. The insurance company will cover up to $2 million in total for all claims filed during your policy period (often one year).
Ensure you pick coverage limits that are high enough to cover the financial risks of a potential lawsuit without costing too much.
What is the typical cost of $1 million liability insurance?
General liability insurance with a $1 million limit ranges between $260 and $3,000 annually. TechInsurance customers pay an average of $45 per month, or $542 annually.
Small businesses that conduct site visits or have a storefront open to the general public often require more general liability coverage due to increased third-party risks. Contracts and rental agreements will even require increased coverage.
A general liability policy with a $2 million per occurrence / $4 million aggregate limit carries a monthly cost of around $46 per month, or $553 annually, for TechInsurance customers.
We source our rates from the median costs of policies purchased by TechInsurance customers from leading insurance companies we partner with. Median rates offer a more accurate estimate of what your small business will likely pay because they exclude outlier premiums.
Keep in mind that when purchasing a policy, your deductible should be an amount that you can easily afford. TechInsurance customers often choose a deductible between $500 and $1,000.
When submitting a liability claim, you are required to pay the deductible amount before your insurance provider covers the remaining costs.
What factors impact general liability insurance rates?
There are a number of factors that contribute to your annual premium costs. To determine the cost of general liability insurance, your provider will consider the following:
Size of business
Your coverage rates are influenced by the size and type of your business location.
Larger buildings and those open to the public carry an increased risk of third-party injuries or property damage. This often increases general liability costs.
For example, restaurants and retail stores generally pay more than closed office spaces because of the increased risk of third-party bodily injury during business operations.
Additionally, the type of business you have can affect rates, especially if you work with the general public and maintain an online social media presence. Having a public-facing business can expose your business to lawsuits for advertising injuries, such as libel or slander.
Industry
Your small business's industry significantly affects your premium. If the type of work you do carries specific risks that can lead to claims, your insurance underwriters will consider those risks and price your policy accordingly.
High-risk industries, such as construction or landscaping, lead to higher insurance costs. While low-risk businesses, like consulting agencies, tend to pay less.
Below are average $1 million liability insurance costs for various industries:
Monthly $1 million general liability insurance policy costs by industry
Annual business income
The higher your annual business revenue, the higher your premium will generally be. Higher revenue often indicates increased business activity and risk exposure to insurance providers.
That being said, this increase also depends on your industry. Some industries see only a slight increase in insurance costs with rising revenue, while others face substantially higher premiums as revenue increases.
Number of employees and contractors
A larger workforce often means higher insurance premiums. This includes full-time and part-time employees, as well as consultants and contractors.
Your premium will likely increase because more employees mean more opportunities for third-party accidents, especially if they interact with the public.
Location
State laws factor into the types of coverage you are required to carry and the area in which your business is located can affect how much you pay for a policy.
Small businesses in high-crime areas or that receive a large amount of foot traffic are often regarded as higher risk and subsequently pay a higher premium than businesses in lower-crime areas or with little foot traffic.
Claims history
Your provider will review your claims history to assess your business's risk. Your prior insurance claims serve as a safety record that indicates potential risk to insurance providers. Previous claims indicate a high risk to insurers, and you will likely pay a higher premium than businesses with few or no claims.
The frequency and severity of past claims will impact how risky your business is perceived and ultimately how much you pay. The fewer claims you have, the lower your costs will be. If previous insurers have had to pay out significant medical expenses, legal expenses, or other costs, you will likely pay more than a business with fewer or no previous claims.
How can I save money on general liability insurance?
Compare quotes
Not all insurance companies will offer the same rates, and comparing rates between insurance providers is a great way to ensure that you are paying the best rates for your small business.
Before making a final decision, talk with a licensed TechInsurance agent about whether a policy truly offers the protection your company requires. Your agent can help you compare prices, review coverage, and pick an affordable plan that protects your business.
Bundle policies
Many insurance providers offer a discount if you purchase more than one policy. Bundling policies can help keep your costs down.
A common bundle combines general liability insurance with commercial property insurance in a business owner’s policy (BOP). It's typically cheaper to buy a BOP than to buy general liability and property insurance separately.
BOPs are usually reserved for small, low-risk businesses. Larger, more risky businesses typically elect to carry a commercial package policy (CPP). A CPP is more customizable and allows you to pick the right limits and endorsements for your business needs.
Pay the annual premium
You can choose to pay your insurance premiums monthly or annually.
While making a smaller monthly payment requires less upfront money, it may cost more in the long run, since insurers often offer discounts to businesses that pay an annual premium.
Risk management
Small business owners can help keep their claims history clean with a risk management plan.
Risk management strategies include:
- Installing fire alarms and fire suppression systems
- Maintaining security systems and alarms
- Having safety policies in place
- Providing regular safety training for employees
How can you increase your general liability limits with a commercial umbrella policy?
A general liability policy is typically capped at a $2 million per-occurrence limit and a $4 million aggregate limit.
Some businesses may be required to carry higher limits based on the level of risk in their industry.
For example, healthcare professionals may be contractually obligated to carry a general liability policy with an aggregate coverage limit of $3 to $6 million. A commercial umbrella insurance policy can provide added liability coverage for more expensive claims.
How much does $5 million in business liability coverage cost?
Very few insurance companies will offer a general liability policy with a $5 million business liability limit. The solution is generally to purchase a general liability policy with a $4 million aggregate limit and a $1 million umbrella liability policy.
Commercial umbrella insurance costs an average of $40 per month per $1 million of additional coverage needed.
Get a $1 million general liability insurance policy for your small business
There are many ways you can find affordable business liability insurance. Fill out an easy online application with information about your business, such as annual revenue and number of employees.
You can contact a licensed insurance agent if you have questions about the right policies for your business needs, such as a business owner's policy (BOP), commercial property insurance policy, or commercial auto insurance coverage.
Other important coverage options that many business owners consider include cyber insurance, workers' comp, and professional liability insurance.
Once you pay for your policy, you can download a certificate of insurance (COI) to show clients and others that your business is protected.
Hear from customers like you who purchased general liability coverage.
