Liability can be tricky. There is a wide range of expenses that can burden your business while fighting liability incidents including paying for a legal team, restoring another party’s loss, covering medical expenses, and more. Making matters worse, such disruptions can have lingering effects on your business. This includes interruptions to your business operations and financial hardships which can slow profits and even shudder your company.
A general liability insurance policy is a type of business insurance that provides valuable protection for your business. Your policy will protect against lawsuits due to negligence from your company. Defective products, careless employees, or a wet surface with a customer present are common examples of how little it takes for your entire business to be in the crosshairs of a drawn-out, costly legal battle. Freedom Insurance Group helps business owners like you protect their interests with quality insurance products built to safeguard your operation at an affordable rate.
How Much Is Liability Insurance for a Business?
Although your rate may vary, the average business in Texas spends only hundreds of dollars per year on general liability insurance. Among some of the variables that will affect your business’s coverage rate, the size and industry of your company will play large roles in the amount you pay. Risker companies with more employees could pay thousands of dollars each year for their protection. For example, a small tech startup in Richardson, Texas, will pay much less than a large chemical plant operating out of La Porte, Texas.
How General Liability Insurance is Calculated
Insurance providers are looking at the amount of risk you pose as a client when they protect your business. The more risk your company presents, the higher the premiums and the less risk posed, the lower premium rates will be. To better understand these risks, you’ll have to look into some of the different factors insurance brands will assess to calculate your rate:
- Where your business is located.
- The industry your company operates within.
- The amount of risk posed during your business’s normal operations.
- The size of your business.
- The number of employees your business employs.
- Your company’s claims history.
- The number of coverages and limits of those coverages you enroll in.
- The age of your business and the amount of experience you have operating within your industry.
- Your policy’s deductible.
Some of these factors are well within your control, while others are out of it. There are plenty of different approaches to assessing these variables and each insurance brand will use its own calculations and methodologies to determine your risk. This is why even similar businesses will receive varying insurance rates. Between the many variables that need to be assessed and the different methods in doing so, each company’s general liability insurance rate is uniquely crafted.
What Does General Liability Insurance Cover?
Your business is protected from the following when enrolled in a general liability insurance policy:
What You’re Protected Against
Bodily Injury Liability
When someone is injured while on your company’s property or due to a member of your company acting negligent, you may be held liable for their medical expenses, loss of income, and other costs. Enrolling in the right insurance products means your company doesn’t have to face such costs alone.
Property Damage Liability
If you or an employee causes damage to another party’s property and you are found at fault, a general liability insurance policy helps you mitigate the cost of restoring the loss.
Legal and Administrative Expenses
Even with insurance, there are legal and administrative costs that may be associated with handling your claim. Without a general liability insurance policy, the legal fees can be astronomical. Having the right protection will offset these costs and soften the blow for your business.
Advertisement and Reputation Disputes
Advertisements and other marketing endeavors from your business that cause damage to another business unjustly can expose your company to lawsuits. Having business liability coverage in place guards your bottom line.
Using content for your company’s marketing can land you in hot water if you do not follow the right licensing standards set by the owner. General liability can help you overcome these missteps.
What Does General Liability Insurance Not Cover?
Your company’s general liability insurance policy isn’t blanket coverage. Its purpose is to protect your business from having to restore the losses of third parties, such as your customers, that are negatively affected by your company’s negligence. Here are some of the areas many business owners may confuse as being covered by a policy, when in fact, they are not:
- Employee injuries.
- Excessive liability losses that exceed your coverage limits.
- Losses involving illegal activities from your employees.
- Losses to your business including property damage. (A commercial property insurance policy can help here.)
- A loss that occurs while your employees are driving company vehicles or their own personal vehicles while conducting business. (You’ll need a commercial auto insurance policy for coverage.)
By assessing your risks with a licensed insurance agent, you can better protect your business’s finances. Review your business operations and your policy with an insurance agent to best prepare and protect.
Businesses in Need of Commercial Liability Insurance
Big or small, all businesses have liability threats. It doesn’t matter if you are an international corporation with thousands of employees or a self-employed contractor, if you are conducting business, you have clients and therefore, the risk of liability. This includes consultants, contractors, creators, freelancers, small shops, restaurants, factories, etc.
A Special Consideration for East Texas Businesses
Image Content Source: GRF and the U.S. Chamber of Commerce
According to a survey from the U.S. Chamber of Commerce, East Texas ranks as the area seen as most unfair to businesses when it comes to lawsuits. Regardless of your location, leaving things up to chance is never a good idea. Lawsuits, even with the best of conditions, are a costly endeavor. All businesses should protect themselves with a general liability insurance policy.
Professional Liability Coverage Explained
A professional liability policy is also known as errors and omissions insurance (E&O), and the coverage is protection for your business when mistakes from your business cause harm to another business. For example, if you are a consulting firm and provide advice that hurts another business, that company can take you to court. With E&O, your business is protected and can file a claim to overcome such issues and avoid a lawsuit all alone.
Note: A general liability insurance policy will not provide this protection. You’ll need to purchase professional liability coverage separately. Speak with your insurance agent to audit your coverage needs to stay protected and avoid coverage gaps.
Umbrella Insurance Supplements General Liability
Insurance policies come with limits. Every so often, you’ll find your business may come across incidents where the loss suffered surpasses the amount of coverage you have. In the business world, losing assets can affect your company, your personal life, and the lives of employees and clients. Umbrella insurance for business helps give your company an extra form of coverage against liability-related losses. It’s supplemental protection that can come in handy for extraordinary losses that can avoid your business having to pay for damages out of pocket.
The Cheapest Business Liability Insurance in Texas
Cutting costs without cutting coverage is what we help business owners do every day here at Freedom Insurance Group. Our general liability policies deliver the protection you need all at an affordable price. By working with 25+ top-rated insurance brands, we can shop your coverage among our many partners to find the lowest rate possible. Get a free quote for your general liability coverage to see why our clients save an average of 40% on their premiums or contact us today!
General Liability Insurance FAQs
Feel free to contact us at any time in regards to your company’s general liability concerns, however, there are some questions that are more universal than others. You can never substitute the expert advice received while speaking to a licensed insurance agent, but below are some frequently asked questions (FAQs) that may be used as a helpful guide.
No, business liability insurance isn’t required by law in Texas, but it is always recommended. Business owners who fail to purchase the proper insurance coverages run the risk of exposing their company to costly liability issues which can include expense legal fees and paying for damages out of pocket. Protect your bottom line with a general liability insurance policy to avoid hassles and mitigate your risk.
No, but together they can help you close coverage gaps with better protection. A general liability insurance policy will protect you from expenses after a customer or third-party becomes injured due to your negligence. Workers’ comp policies help pay for expenses after an employee suffers an injury while performing a job task.
No, again, this is where workers’ comp would kick in. A general liability insurance policy is to help non-employees restore losses caused due to your company’s negligence.
A general liability insurance policy works for contractors the same way it works for larger businesses. You gain protection to your business’s financial health by safeguarding against lawsuits involving medical expenses, property damage, and advertising disputes. In many cases, being licensed and insured is a requirement for many contractors and failure to do so can leave you exposed to liability problems or failing to book jobs.