No matter what line of work you are in, business owners need liability insurance. This type of coverage protects you from being responsible for monetary damages claimed by customers or employees who have been injured on-site and losses suffered due to negligent management or company procedures. It's difficult to estimate the average cost of business liability insurance, because virtually thousands of types of businesses exist with various levels of coverage. To get an accurate idea of how much liability insurance will cost for your business, you must consider several factors.
How Rates Are Calculated
A common estimate for liability insurance is about two to four dollars for every $1,000 worth of sales. However, the amount you'll pay for business liability insurance is generally determined based on your payroll and sales statistics prior to the date of policy issuance. Once the policy has been issued, rates and premiums are subject to change according to actual figures and payments may be adjusted accordingly. For instance, if you pay three dollars per $1,000 based on sales estimates of $100,000, your premium would be $300. But if you actually make $150,000 in sales during the policy period, you may to have to pay an additional $150. If you only earn $75,000, you could be entitled to a refund or credit of $75.
The cost of your business liability insurance will also be determined in part by numerous risk factors. Your insurer will scrutinize your the business history to evaluate financial stability, longevity, the amount of previously filed claims and future probability of claims. Your products and services will also be evaluated for safety and risk, as well as state laws and operational procedures. The number of employees may play a role in establishing your liability insurance rates as well, since larger staffs increase the probability of insurance claims.
Though you'll have to check with your insurance broker for accurate rates that correspond with your business needs, certain occupations generally have higher risk factors -- and premiums -- than others. For instance, if you manufacture and distribute toys, your liability insurance rate may be set at $4 per $1,000 in sales and you'll pay $4,000 for each $1 million in sales. A business that yields less risk of injury or lawsuits such as a florist might only pay $1.50 per $1,000. At the time of publication, the National Network for Child Care reports that the average cost of business liability insurance for home-based day care centers is between $350 and $700 annually. According to the Professional Photographers of America website, photographer's liability coverage costs about $1,000 to $1,500 per year. The Ask For Insurance web resource reported that in 2009 the average cost of liquor liability insurance was about $500 per year.
Get A Quote
The most accurate way to determine what types of professional liability insurance are best for your business is to get a free quote from a professional business insurance broker. In fact, having your business and insurance needs evaluated by several insurance agencies can help ensure that you get the proper coverage at the best price. Online resources such as Buyer Zone and Hiscox Insurance provide step-by-step questionnaires that help guide you to the right insurers and policies for your business. By filling out the online contact forms and answering a few questions about your company, you can easily locate the appropriate agencies and policies to get a quote.