The Best Business Liability Insurance Providers of 2021

There's a wide range of business insurance providers in today's market, which can make choosing the best one for your business a tough process. When looking for an insurance provider, you should take a number of factors into consideration. Here are some of the main points you should look into.

COMPANY EXPERIENCE

Not all businesses or industries face the same risks, so you'll want to look for a company that has the background and experience to handle insurance for your type of business. Also look for customer testimonials. If you expect your business to continue growing, consider whether the company offers coverage that can grow with you. 

COVERAGE

Many companies sell general liability business insurance, but it can be challenging to determine the type of coverage you'll need. Consider the risks you face in your business; different types of businesses have different risks. For instance, a medical practice would need more coverage than an arts and crafts supplier.

If you have a high-risk business, seek out insurers that offer excess insurance or umbrella policies to expand your coverage. These will cover you if a claim against you exceeds the amount of your general liability policy. These are a couple of the questions you should ask yourself and/or the insurance provider in your research process:

• Can the insurer provide enough coverage for all of your assets' liabilities as well as damage?
• Is the provider's liability insurance adequate for your business's risks?

If you are a contractor or perform projects for other companies, it's important to check with your client about insurance. A contract for which you perform work may require a certain amount of insurance coverage or an umbrella policy, or sometimes a company will add you to its general liability policy to be insured on a specific project. Some businesses are required by state law to carry certain types of liability insurance, so check your state's requirements. 

CLAIMS PROCESSING

You want an insurer with a proven record of settling claims quickly and fairly. Check an insurer's claims process to see if it offers several options, including online tools, to submit and track a claim. The more options for submitting a claim, the better. The insurer's track record for how quickly it processes claims is also important.

You also may want to make sure the insurance provider lets you file claims 24/7. Should something happen on the weekend or late at night, you don't want to have to wait to start the claims process.

Read testimonials from people who have been through that insurance company's claims process. The insurer should have a history of high customer satisfaction. Business liability insurance companies should be responsive and supportive should you ever need to file a claim.

Business liability insurance is a critical policy for most businesses. It protects you from a wide variety of potential issues. Specifically, these policies cover bodily injury to others who come into your business. This could be a customer in your retail store or a client in your office. General liability insurance also protects against damage to the property of anyone who comes into your store, office, plant or any other type of business location. In both of these instances, the business liability insurance can cover any legal or medical costs you incur.

Besides protection against claims from clients, customers, and other visitors to your business, business liability insurance protects against advertising injury. This means claims of false advertising, libel, slander or copyright infringement. For example, if you put out an ad that mentions one of your competitors in a bad light and they sue you with a claim that the ad negatively impacted their business, your insurance can cover the costs of defending yourself.

Whether you win or lose, such lawsuits can be extremely costly and time-consuming, taking your focus away from generating revenue. This can be devastating for a small business, so general liability insurance is extremely important. Small business liability insurance allows you to focus on your business even when you're facing a claim of damage, injury or negligence.

Another benefit of business liability insurance is protection against damage to property you rent. If equipment or other property is damaged by fire, lightning, or an explosion, your insurance will cover the costs.

There are several other types of liability policies that some businesses may benefit from.

• Professional liability insurance: As we discussed above, this is designed for businesses that provide professional services for clients. Also referred to as E&O insurance, this type of policy covers businesses that are being sued for negligence in the services they provide. Basically, professional liability insurance covers businesses that are sued for making a mistake with a client, whether the claim is founded or unfounded.
  
  
• Management liability insurance: This is designed to cover businesses in instances where managers are sued for things like breach of responsibilities or wrongful termination. It includes more specific policies like directors and officers (D&O) liability, fiduciary liability, and employment practices liability.
  
  
• Cyber liability insurance: This protects your business from the expenses associated with incidents like computer hacks and data breaches. Research from Chubb shows the importance of cyber liability insurance. According to the Chubb Cyber Index, the number of cyber incidents that have impacted businesses has increased by more than 500% since 2012. Social attacks like phishing scams and blackmail account for 21% of all incidents since 2009. Errors, hacking and malware were the other top causes of cyber incidents over the past 11 years.

When you're deciding which types of liability insurance you may benefit from, the first thing to consider is your type of business. How large is your organization? What is its legal structure? What industry are you in? Where is your business located? Answering all of these questions will help you determine which liability policies you need to properly protect your business.

You don't have to figure this all out on your own. Don't hesitate to talk to various insurance agents to get their take. Give them the details of your business and how it operates, and they will make recommendations based on their industry expertise.

There are various types of small business insurance besides general liability.

Professional Liability

Professional liability, commonly known as errors and omissions (E&O) coverage, insures small businesses for claims of actual or alleged mistakes that cause financial harm to a third party or a failure to provide a service. There are specialized E&O insurance plans for professionals such as architects, attorneys, insurance agents, consultants, accountants and media producers.

Product Liability

Product liability covers a business, such as a product manufacturer, against third-party claims of bodily harm, illness or damage related to the business's product. This can extend to individual parts or components that your small business manufactures.

Commercial Property

Commercial property insurance covers accidental damage to your small business's property. This damage could be from things like a fire, storm, burglary or vandalism. 

Business Interruption Insurance

Business interruption insurance helps support small businesses with commercial property insurance in the event of halted business operations and/or relocation of a business related to an event like a fire or storm.

Crime and Financial Liability

Crime and financial liability policies cover losses due to theft of business property, which can include stolen money, employee financial fraud, workplace violence, electronic and computer crime, and kidnap, ransom or extortion.

Cyber Insurance

Cyber insurance isn't usually included in general liability, professional liability or property plans; it is often sold separately to businesses. Cyber insurance can protect against numerous cyberattacks, such as data privacy breaches, cybercrime, malware and ransomware.

The specifics of your general liability insurance coverage will be detailed in your small business's particular policy, but in general, it covers property damage (including to a third party's property), bodily injury (such as slip-and-fall incidents on your premises), legal costs, medical expenses, and personal and advertising injuries that would be damaging to a business's reputation. On that last point, there are also specialized reputation coverage packages that expand protection in this area, with liability limits of up to $5 million.

Excess liability coverage is available in a number of areas. This goes beyond general liability insurance, offering additional protection and raising the coverage limit for certain areas of your policy.

Overall, general liability insurance underwriters look at your business's size, location, years in operation, scope of operations, and insurance claims history to assess your small business for risk.

As part of our research on the best liability insurance providers, we reached out to small business owners to find out what they look for in policies and providers. The small business owners we heard from said industry-specific coverage options and insurance for cyberattacks and data breaches top their lists of must-haves.

Eunice Sosa is the CEO of Sosa & Arvelo LLC, which provides accounting, tax, business and technology advice. She said that small businesses face more cyberthreats than people might think, and that small companies often don't realize the amount of data they are storing.

"Cyber insurance is what [businesses] need to be looking for," Sosa told business.com. She put cyber insurance at the top of her agenda due to her line of work.

Sosa said her company has used or considered Chubb and Travelers because their policies contain cyber coverage, and they offer personal attention for small businesses and "grow with you as well,” which is key for growth-oriented companies seeking flexible policies.

Selmin Karatas, co-founder and CEO of Kazani Beauty, said finding adequate coverage for the right price was her top priority when searching for an insurance provider.

"I wanted to sell at Whole Foods, and you need at least $2 million in coverage there," Karatas said.

She said this is why she opted for a policy from Great American Alliance Insurance Company, which covered specifics for product manufacturers such as finished product liability, warehouse liability (property damage, personal injury coverage and medical expenses) and onsite liability within the range she needed.

WHAT IS COMMERCIAL GENERAL LIABILITY INSURANCE?

Commercial general liability insurance is another name for business liability insurance. It covers a wide range of potential issues, including injuries to people other than your employees who enter your store or workplace, and damage that may occur to their property there. It also protects you against lawsuits that might come your way should one of your ads cause harm to a competitor. This coverage includes claims of libel or slander.

This type of coverage is necessary for most businesses, as it provides protection and coverage against many possible issues.

WHO NEEDS BUSINESS LIABILITY INSURANCE?

Nearly all businesses, regardless of industry, should have some level of business liability insurance. It can cover your business in many different scenarios, such as if a customer is injured inside your store or if your products cause bodily harm to someone.

All businesses can benefit from this layer of protection to help cover defense fees or potential judgments. Like other types of insurance, general liability is something you hope you never have to use, but if you don't have it if and when you do need it, you could put your business in serious jeopardy.  

HOW MUCH GENERAL LIABILITY INSURANCE COVERAGE DO YOU NEED?

This depends a lot on the type of business you have. Insurance providers offer a range of coverage amounts, from $100,000 to $2 million for one instance and $4 million for all instances. Many providers offer umbrella policies that can increase that amount to as much as $10 million.

You need to take a number of factors into account to determine how much coverage you need from your insurance policy. Your industry, location, revenue, number of daily visitors and type of workplace (e.g., a retail outlet, office or manufacturing plant) will help you determine the right level of coverage for your business.

HOW MUCH DOES GENERAL LIABILITY INSURANCE COST?

Like the amount of coverage you need, the cost of general liability insurance depends greatly on the type of business you have. Your company's risk exposure, size, building construction, requested coverage amount, geographical location and number of employees, among other things, all factor into the rate you'll pay for liability insurance.

Many insurance providers offer online quotes, meaning you can fill out some information about your business on their websites and receive estimates of your insurance rates instantly. This is an easy way to shop around for your insurance. When filling out these forms on some insurers' websites, we found prices ranging from about $450 to $700 per year for liability coverage of $1 million for a retail store.

DO YOU REALLY NEED BUSINESS INSURANCE?

The quick and easy answer to this question is yes. Besides the fact that it protects your business from various claims that may come your way, some types of business insurance are required by law. Specifically, if you are hiring employees, many states require you to have workers' compensation insurance. Barring that, it really comes down to choosing the insurance policies that are right for your business. At a minimum, all businesses should carry some liability insurance as well as property insurance.

WHY DOES A BUSINESS NEED LIABILITY INSURANCE?

Businesses need to be able to protect their assets and financially deal with potential legal issues. Liability insurance can shield your company from those costs, which is helpful in the event that your business is sued, whether it's a third-party lawsuit, a slip-and-fall accident, or another incident that has the potential to hurt your business.  

DO YOU NEED BUSINESS INSURANCE FOR AN LLC?

While your personal assets may be protected if you own an LLC, you still need business insurance, especially general liability coverage. Even though a potential lawsuit against your business may spare your personal assets, you are still putting your business in serious risk if you don't have business insurance. An LLC faces much of the same dangers as businesses with other structures, so you should still protect it with the proper insurance policies.

IS OWNING AN LLC CONSIDERED SELF-EMPLOYMENT?

Yes, if you own an LLC, you are a self-employed individual. LLC owners, called members, are required to pay self-employment taxes. 

WHAT HAPPENS IF SOMEONE SUES AN LLC?

If your LLC is sued, your business generally assumes the liability of the judgment, and you, the business owner, will not be held liable – meaning that your personal assets or bank account will be safe from any impact of the lawsuit. However, there may be exceptions if your LLC wasn't formed or managed correctly, if you mixed your personal and business finances or assets, or if you signed contracts with personal guarantee clauses.

HOW MUCH DOES LIABILITY INSURANCE COST FOR A SOLE PROPRIETOR?

It is especially important to get liability insurance if you are a sole proprietor, because the legal responsibility for your business rests solely on you. The cost of general liability insurance varies wildly depending on the specifics of your business – it could be anywhere from $500 to $15,000 annually – so you'll need to call at least two providers to get an idea of what you can expect to pay. The factors that affect price include your type of business, the state you do business in, your annual revenue, and whether you have past insurance claims.

WHAT IS NOT COVERED BY GENERAL LIABILITY INSURANCE?

General liability insurance only helps you with third-party lawsuits that involve customer injuries (including product and/or advertising liability) or property damage. For instance, if you or your workers get into an accident or damage company vehicles, your business liability policy will not cover it. It will not cover damage to your business if you or your employees caused the destruction. However, if a customer destroys your property, the liability policy will likely cover it.

Employee accidents (like a slip-and-fall incident on your premises) aren't covered – you'll need workers' compensation for that – but if a customer hurts themselves in your establishment, your liability policy may help pay for their medical fees.

WHAT ARE THE DIFFERENT TYPES OF LIABILITY INSURANCE?

Several kinds of liability insurance are available for small business owners:

• Commercial general liability protects your business against claims of property damage, bodily injury, and reputational or advertising harm.
  
  
• Directors and officers (D&O) liability protects the personal assets of those in these roles (and their spouses) against claims by employees and customers.
  
  
• Professional indemnity insurance protects business owners who provide guidance or other professional services against lawsuits accusing them of errors.
  
  
• Cyber risk insurance covers your business's liability for damages or losses due to a data security breach and mitigates recovery costs.
  
  
• Commercial crime insurance protects you against damages due to insider threats, like employees who have stolen money or forged documents. 

WHO GETS PROFESSIONAL LIABILITY INSURANCE?

Professional liability insurance is essential for small business owners and independent contractors who provide professional services. Accountants, lawyers, doctors, architects, engineers, insurance agents, and other professionals looking for protection against claims of negligence should get this type of coverage.

Specific types of professional liability insurance include medical malpractice insurance, which protects doctors, and E&O insurance, which is used by professionals who provide advice or services.

Is general liability insurance tax deductible?

In general, yes. According to the IRS, you can deduct "the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession."

To determine the best business liability and workers' compensation insurance companies, we started with a list of 18 providers. We then visited each company's website for some initial research.

Next, we focused on some of the bigger insurance companies and eliminated companies that are just insurance brokers, which work with businesses to find them the best coverage and rates for their needs.

We focused our examination of this narrower pool on several factors:

• Liability insurance options
• Workers' compensation insurance
• Other insurance options
• How rates are determined
• Coverage amounts
• The claims process
• Better Business Bureau ratings and complaints