General Liability Insurance Premiums: What You Need to Know

As your business grows, it’s important to make sure you have the right insurance coverage in place. One of the most important types of insurance for businesses is general liability insurance. General liability insurance protects your business from third-party liability claims, such as those that arise from injuries or property damage that occurs on your property.

The cost of general liability insurance is based on a number of factors, including the size of your business, the type of business you operate, your location, and your claims history. In general, the larger your business and the more risky your industry, the higher your premiums will be.

How to Calculate Your General Liability Premium

Your general liability premium will be calculated based on a number of factors, including:

  • Your business’s gross sales: Your gross sales are the total amount of money your business brings in during a given period of time.
  • Your business’s payroll: Your payroll is the total amount of money you pay your employees during a given period of time.
  • Your business’s industry: The type of business you operate will impact your risk profile and, therefore, your premium. For example, businesses in the construction industry are generally considered to be higher-risk than businesses in the retail industry.
  • Your business’s location: The location of your business can also impact your risk profile and, therefore, your premium. For example, businesses located in urban areas are generally considered to be higher-risk than businesses located in rural areas.
  • Your business’s claims history: If your business has a history of claims, your premium will be higher.

How to Obtain a Lower General Liability Premium

There are a few things you can do to negotiate a lower general liability premium, including:

  • Work with an experienced broker: When it comes to commercial insurance, your choice of broker is extremely important. We have had clients come to us that have received much higher quotes or have had their accounts completely denied by insurance carriers simply because the broker did not submit a clean file to the underwriter. We have gone back to these same companies and achieved acceptance and lower rates than many of our competitors.
  • Consider your risk factors: Be honest with the insurance company about your business’s risk factors. This will help them to determine the appropriate premium for your coverage.
  • Ask about your broker about the resources they have to help you obtain additional discounts: Many insurance companies offer discounts for things like safety programs, employee training, and good claims history. Be sure to ask about any discounts that may be available to you.
  • Be prepared to walk away: If you are not happy with the proposal that you receive, be prepared to walk away. There other firms out there that have the resources available to put your business in the best position for long term profitability. 


General liability insurance is an important type of insurance for businesses of all sizes. By understanding how general liability premiums are calculated and how to negotiate a lower premium, you can help to protect your business from financial losses that may arise from third-party liability claims.

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