Small Business General Liability

Frequently Asked Questions

What does general liability insurance cover for small business?

Third-party bodily injury, third-party property damage, and personal/advertising injury (libel, slander, copyright). Typical limits are $1M per occurrence / $2M aggregate. Does not cover employee injuries, professional errors, or your own property.

How much does small business GL cost?

Insureon's 2024 data: median monthly cost is $42 ($504/year) for low-risk businesses. Higher-risk industries: contractors $85-$200/month, restaurants $100-$300/month, manufacturing $150-$500/month. Revenue, location, and claims history drive pricing.

Do sole proprietors need general liability?

Yes - sole proprietorships have unlimited personal liability. A single GL claim can exhaust personal assets. Many client contracts and commercial leases also require proof of $1M+ GL coverage.

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This calculator provides estimates based on general assumptions. Actual insurance costs and coverage vary by insurer, location, and individual risk factors. Not a quote or binding offer. Contact insurance providers directly for accurate quotes and coverage options.

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How This Calculator Works

This tool estimates the annual premium for a Commercial General Liability (CGL) policy - the foundation coverage that pays third-party bodily injury, property damage, and personal/advertising injury claims. It starts from an industry class rate applied to your revenue, then adjusts for headcount, time in business, claims history, and the coverage limits you select. Rates span a wide range: low-hazard consulting and SaaS sit near 0.30–0.35 percent of revenue, while roofing runs around 2.6 percent.

Formula

Revenue-based premium uses your class base rate, but scales sub-linearly above $500K: first $500K × rate, plus revenue above $500K × rate × 0.55. That subtotal is then multiplied by an employee factor (1 + 0.03 per employee beyond the first), a tenure factor (0.88 at 10+ years up to 1.15 under 2 years), a claims factor (1.0 with none, up to 2.2 with three or more), and a limit factor (0.80 for $500K/$1M up to 2.10 for $5M/$5M). A $400 floor applies.

Worked Example

A retail store (base rate 0.0070) with $500,000 revenue, 5 employees, 5 years in business, no claims, and standard $1M/$2M limits: revenue base = 500,000 × 0.0070 = $3,500. Employee factor = 1 + 4 × 0.03 = 1.12; tenure 0.93; claims 1.0; limit 1.0. Premium = 3,500 × 1.12 × 0.93 ≈ $3,645/yr, about $304/month, or roughly 0.73 percent of revenue.

Common Mistakes

Misclassifying the business - the class code creates a 3×+ spread, so the wrong code badly distorts the quote.

Carrying below the $1M/$2M baseline that most leases, vendor contracts, and government bids require.

Underestimating claims impact: a single claim can add about 25 percent and three or more can roughly double the rate.

Buying standalone GL plus property instead of bundling into a Business Owners Policy (BOP) for around 15 percent savings.

Tips & FAQ

What does CGL actually cover? Customer bodily injury, damage you cause to a client's property, personal and advertising injury (libel, copyright), products and completed operations, and small no-fault medical payments.

What drives my rate most? Industry class code and annual gross revenue are the two biggest factors, followed by employee count, claims history, and tenure.

How do I save? Bundle into a BOP, pay annually to skip installment fees, document OSHA safety training, and quote 3+ carriers since rates vary 40 percent for the same risk. Common add-ons include hired/non-owned auto, cyber liability, EPLI, and a commercial umbrella.

Small Business General Liability

Frequently Asked Questions

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