Running a business comes with plenty of responsibilities – and risks. Whether you own a bakery, freelance from home, or manage a small tech startup, business liability insurance is one of those essential protections you can’t afford to ignore. But how much does it actually cost?
What Is Business Liability Insurance?
Business liability insurance, also known as general liability insurance, protects your business from common risks such as:
- Third-party bodily injury (e.g., a customer slips in your shop)
- Property damage caused by your business operations
- Legal fees and settlements related to lawsuits
- Advertising injuries, like copyright or slander claims
It’s often the first policy business owners purchase because it covers such a wide range of risks.
Average Cost of Business Liability Insurance
In the U.S., small business liability insurance typically costs between $30 and $60 per month, or roughly $360 to $720 per year.
However, the actual price can vary significantly based on several factors:
What Affects the Cost?
1. Type of Business
A yoga instructor will usually pay less than a construction company. High-risk industries like contracting, roofing, or manufacturing tend to have higher premiums.
2. Business Size and Revenue
The more employees or revenue you have, the more coverage you may need – and the more it may cost.
3. Location
Insurance costs differ by state and city. For instance, policies in states with higher legal risks or more natural disasters may be pricier.
4. Claims History
Businesses with a clean record will usually pay less. A history of lawsuits or insurance claims can raise your premium.
5. Coverage Limits
The more protection you want, the higher the cost. A $1 million per occurrence / $2 million aggregate policy is a common choice for many small businesses.
6. Deductibles
A higher deductible means lower monthly premiums-but more out-of-pocket costs if you ever need to file a claim.
What’s Included in a Basic Policy?
Most basic general liability insurance policies include:
- Legal defense fees
- Medical payments
- Settlements or judgments
- Repair or replacement costs for damaged third-party property
Optional add-ons or separate policies may be needed for:
- Professional errors (professional liability)
- Employee injuries (workers’ compensation)
- Business vehicles (commercial auto insurance)
Real-World Examples
- A freelance graphic designer might pay around $25/month
- A retail shop with foot traffic could pay $45–$60/month
- A small contracting company might pay $75–$120/month
These are just estimates, but they show how your industry really matters.
Is Business Liability Insurance Worth It?
Absolutely – even one small accident or lawsuit could cost you thousands without coverage. The average slip-and-fall lawsuit settlement can easily exceed $20,000. Having a policy can be the difference between staying afloat or going bankrupt.
Plus, many landlords and clients require proof of insurance before signing a lease or a contract.
How to Save Money on Business Liability Insurance
- Bundle policies (e.g., with property insurance)
- Raise your deductible if you can afford it
- Shop around and compare quotes from multiple providers
- Maintain a safe workplace and document safety procedures
Some providers also offer discounts for home-based businesses or for paying annually instead of monthly.
Final Thoughts
Business liability insurance isn’t just another business expense – it’s peace of mind. With affordable monthly premiums and powerful protections, it’s a must-have for entrepreneurs who want to protect what they’ve built.
Whether you run a coffee shop, a digital agency, or a landscaping crew, the right policy can shield you from unexpected financial setbacks and legal headaches.