Liability Insurance Cost: Average Rates & What Drives Them

Business liability insurance pays when someone says your company caused them harm. The usual case is a customer who is injured on your premises or a client whose property is damaged by your work. General liability is the policy most people mean when they ask about liability insurance cost, and it is the one covered in the figures below. Professional liability, product liability, and commercial auto liability are separate policies with their own prices.

This guide shows published averages by industry and by state, explains why sources disagree, and lists what to compare in a quote. A licensed insurance agent or broker can say which liability coverages your business needs.

Four sources publish an average for general liability. They differ because each measures a different group of businesses.

Insureon reports the median premium paid by its customers, most of whom are very small. MoneyGeek models premiums for a small business with one to four employees. The Hartford reports the average for its own policyholders. ERGO NEXT describes where many of its customers fall, and its low end applies to lower-risk businesses.

None of these is wrong. They answer slightly different questions, and your quote will land near the one that most resembles your business.

Industry is the strongest driver of a general liability premium, because the risk of injury or property damage varies a great deal from one business to another.

Technology businesses pay the least in this group, since their work rarely puts customers or property at risk. Healthcare and construction pay far more, because of the risks involved in treating patients and working on job sites.

Court systems, jury awards, and state law shape what insurers charge. These examples show the spread between a low-cost state, a mid-range state, and a high-cost one.

California is among the more expensive states for general liability, while West Virginia is the cheapest in MoneyGeek's data. If your business operates in more than one state, an insurer will usually rate each location.

• Industry and operations. Customer foot traffic, work on client property, and physical products all raise exposure.
• Business size. More employees means more opportunity for claims. The cost rises as headcount grows.
• Revenue. Higher sales usually means more customers and more exposure.
• Coverage limits. Many policies come with a per-occurrence limit and a separate aggregate limit. Higher limits cost more.
• Deductible. A higher deductible lowers the premium and raises what you pay on a claim.
• Claims history. Prior claims raise rates.
• Location. Rates differ across states and between urban and rural areas.

General liability typically covers bodily injury to third parties, damage to their property, and certain advertising-related claims, along with legal defense costs. It does not cover injuries to your own employees, which fall under workers' compensation. It also does not cover professional mistakes in advice or services, or damage to your own property. Those needs are met by separate policies.

Combining general liability with commercial property coverage in a business owner's policy is common for small businesses and is often priced below buying the two separately.

• Are the per-occurrence and aggregate limits identical across quotes?
• What is the deductible?
• Does the quote include the endorsements your landlord or client requires?
• Which exclusions apply to the work you do?
• Is the price a monthly installment or an annual total, and are fees included?