Questions to Ask When Purchasing General Liability Insurance

NYC is an expensive place to run a business, but you wouldn’t dream of going anywhere else. You’re pouring your heart and soul into your business, so it only makes sense to protect it, and yourself, with proper business insurance that covers you for costly damages and legal claims that can put a ‘closed’ sign on your door.

New York State is one of the most litigious places to do business. Everything’s bigger, including lawsuits and settlements, even if you don’t go to trial.

4 out of ten small businesses are likely to experience a property or general liability claim in the next ten years.

Small businesses are a frequent target of frivolous lawsuits since they are more likely to settle for less than spend thousands in litigation. As a result, small businesses pay about $35.6 billion out of pocket to settle claims each year.

Questions to Consider When Looking Into General Liability Insurance

questions to consider for general liability insurance

As brokers, we are going to help you understand what questions to consider when looking to purchase general liability insurance for your small business:

How Much Liability Coverage Do I Need?

Any business that interacts with the public or customers or has a location that is open to the public should get general liability insurance. But some industries are higher risk than others. For example, a retail shop open to the public has more risk exposure than an IT consultant working from home. Remember that choosing the right coverage for your business is very important because once the coverage limit has been reached, any remaining liability cost must be paid by your business and could even create a liability.

How Much Does General Liability Insurance Cost?

There is no really average number we can provide to you here. The premiums for General Liability Insurance vary depending on a number of factors. “Small Business general liability pricing is mostly predicated on what you do and how much of it you do. Gross Sales is the most common pricing factor for product driven businesses and payroll most common for artisan/service-oriented businesses (interior designers/carpenters),” states HCP Insurance Broker Natale Scopelliti. “An office is usually priced based on square footage.” Location also plays a huge role in the cost of general liability insurance. Different territories have different rates they use for liability class codes. For example, the code for concrete work in Manhattan is going to be much higher than a concrete guy that works in upstate New York. “NYC rates are probably the highest in the state for all liability class codes,” explains agency partner Michael Honig.

What Does General Liability NOT Cover?

General liability insurance does not cover professional errors, employee injuries, damage to your business property, employee discrimination lawsuits, and use of vehicles.

How Will General Liability Insurance Help My Small Business?

General liability insurance can protect you against lawsuits and bankruptcy, can pay the medical expenses if others are injured on your property, can protect company assets, can pay for unexpected legal costs, and can help you rent a commercial space.

What Is the Most Costly General Liability Claim for Small Businesses?

Did you know? The most costly claim is reputational harm. This includes libel, slander, and violation of privacy.

What Other Coverages Might I Need?

Depending on your business, you might need all or none of these:

Property: no matter if you rent, lease or own your own building.
Professional liability (E&O): if you offer professional services or regularly give advice to clients.
Workers’ comp: if you have employees.
Employment Practices Liability: if you have even one employee.
Auto policy: if you have company cars or use your own car for business.
Cyber insurance: if you handle sensitive information, store data or process credit cards.

How Do I Reduce My General Liability Risk?

While General Liability Insurance protects you from unexpected expenses due to liability, you need to do your part as the business owner to reduce liability risks as much as possible. Here are a few tips to help mitigate your liability risks when running a business: