How Much Should Commercial General Liability Insurance Cost?
Commercial General Liability Premiums can vary greatly between businesses within the same industry. The size of the business, in number of employees and in cost of payroll, and the risks involved in the nature of the business will most influence the cost of commercial insurance coverage. Rates also vary from state to state. Professional associations, such as builders’ exchanges, can often suggest coverages and provide insight into costs and fees. For full insurance company histories, check with the state insurance department or the National Association of Insurance Commissioners.
Gathering Quotes
When shopping for insurance, compare specialization, communication, coverage offered, price and deductible coverage.
- Specialization: After determining what insurance coverage the business needs, research industry insurance specialists. Because these professionals have the most experience with the risks of the industry, they will likely know how to best protect your business for the least amount of money.
- Communication: Insurance contracts are notoriously difficult to read, so ask the representative to explain the terms. If the agent can’t articulate the terms of the contract clearly, he or she will likely not effectively communicate or clarify in the event of a claim. Taking notes during the interview makes recalling information easier and also assists when comparing companies. Choose the insurance professional who communicates effectively and offers a competitive rate.
- Coverage Offered: General Liability Insurance contracts cover claims made against the insured for bodily injury, personal injury, advertising injury and property damage. Since each business has its own risks, try to negotiate for more coverage on certain perils or to include additional risks. Insurers hesitate to add provisions or extend coverage, but preparing a case for the request before entering negotiations could persuade the company to reconsider.
- Price: In the competitive business of insurance, companies that offer the lowest price typically do so because they offer less coverage or make collecting on claims difficult. When comparing policies, ensure that each company offers similar coverage and terms. Ask questions if one company produces a quote significantly less than others. Instead of the cheapest price, search for the simplest price structure. Reasonable pricing structures and policy clarity are far more important than the lowest commercial insurance premium.
- Deductible: Higher deductibles reduce the cost of monthly premiums but increase the amount the insured pays for a loss claim. Consider how often the company could incur a loss—if the industry experiences loss often, then a higher premium could protect the company from a catastrophic financial loss in the event of a large claim. Companies with fewer risks could afford to pay a lower premium for a policy with a higher deductible. When comparing premiums, make sure that deductibles remain consistent.
Lowering Insurance Costs
Implementing a company Code of Safe Practices or a safety training program demonstrates a commitment to safety that many insurance companies will reward. Draft a list of all the ways the business protects itself, through policies, training, equipment or responses to accidents. If the insurer doesn’t approve the discount initially, don’t get discouraged. After committing to an insurance company, the insured has the right to review the policy before renewing it. If the company has had few to no accidents over the policy term, consider negotiating for a lower rate again.
