Factors Influencing General Liability Insurance Prices
our out of 10 small business owners are likely to experience a property or general liability claim in the next 10 years, according to an analysis of The Hartford’s small business claims.* From customer injuries to reputational harm, a general liability insurance policy can help protect you and your business from various claims.
Different factors can affect your general liability insurance costs. No two businesses are the same, so the policies and rates are unique to each business. Some common factors that can have an impact on your insurance rate include:
Exposure to risk: If your business is operating in an industry that has high levels of risk, your general liability insurance premium can be higher.
Business location: Your business’s geographical and specific location can affect your insurance premium. For example, a highly populated city could increase the likelihood of a bodily injury claim, which would have an impact on your premium.
Years in business or the industry: How much experience you have can factor into how much you pay for an insurance premium. If you’ve been in business for a long time and have been experiencing growing revenue, this could affect your premium.
Type of business: Some businesses operate in industries that are riskier than others. For example, a contracting business is involved in risky work and may pay a higher insurance premium than a similarly sized accounting firm.
Your deductible: The deductible amount you choose for your insurance policy has an impact on the premium. If your deductible is higher, you may pay a lower premium than a policy with a lower deductible.
Most Costly Property and General Liability Claims for Small Businesses
Whenever a claim is filed, insurance costs are higher if it leads to a lawsuit. A lawsuit can increase the average general liability claim to more than $75,000 to defend and settle.*
It’s not uncommon for a claim to lead to a lawsuit, either. In fact, 35% of all general liability claims result in a lawsuit.*
General liability insurance can help cover the costs of expensive property and liability claims. Some of the most costly claims include:
Reputational harm: The average costs for claims of reputational harm are $50,000.2 These claims include financial damages from libel, slander, defaming products or services, or violating privacy.
Vehicle accidents: Vehicle accident claims cost an average of $45,000.3 This includes accidents involving employees of a small business owner who uses their personal vehicles for business purposes. This average cost can be higher if the claim leads to a lawsuit.
Fire damage: Claims of fire damage cost an average of $35,000.*
Product Liability: The average cost of a product liability claim is $35,000.4 This may apply to injury or damage arising out of the use of a covered product.
Customer injury or damage: The average cost of a customer injury or damage claim is $30,000.5 This includes damage to the customer’s property and injury to the customer caused by the small business owner.
Tips for Preventing the Most Common Claims and Costs
The most common property and general liability claims are burglary, theft, and reputational harm. As a small business owner, you can be proactive in preventing these claims.
Consider conducting background checks to help prevent burglary and theft at your business. Installing security devices at your business can also help you control unauthorized access to your company.
To help prevent reputational harm claims, consider avoiding criticizing a competitor publicly or to customers. And if you’re using photos or other content on your website or in marketing materials, be sure to have permission to avoid copyright infringement.
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* The information outlined in this infographic is based on an analysis of five years of claims data (2010-2014) from more than 1 million Hartford Business Owner’s policies.
2 Reputational harm claims include financial damages from libel, slander, defaming products or services, or violating privacy.
3 Vehicle accidents include accidents involving employees of the small business owner who use their personal vehicles for business purposes. Average costs can be higher if a lawsuit is involved.
4 Product liability insurance may apply to injury or damage arising out of the use of a covered product.
5 Customer injury and damage covers damage to the customer’s property and injury to the customer caused by the insured small business owner.