Small business owners in Utah may learn more about Utah general liability insurance and how it can help them avoid the financial devastation that can result from lawsuits and settlements by reading this article. If you own a small business in the state of Utah, whether it’s in Salt Lake City, West Jordan, Orem, Sandy, Ogden, St. George, or anywhere else, you need to be sure you have adequate general liability insurance coverage. This article further discusses the cost of general liability insurance in Utah and the best companies to get this insurance from.
What Is General Liability Insurance in Utah?
General liability insurance coverage in Utah, like in other states, provides essential protection for businesses. It covers common risks that many businesses face, such as property damage, bodily injury, and legal costs arising from accidents, negligence, or other liabilities. This insurance is crucial for businesses of all sizes, including small businesses, as it helps protect their assets and finances.
In Utah, it is common practice for businesses to purchase general liability insurance as a hedge against legal action and resulting financial losses. Whether you own a retail store in Salt Lake City or a tech startup in Provo, having this insurance can shield your business from various liabilities. For example, if a customer slips and falls in your store, general liability insurance can cover their medical expenses and legal fees if they sue you for negligence.
Additionally, this insurance can cover property damage resulting from your business operations. General liability insurance can help cover the expenses of repairing damage to a client’s property, for instance, if your construction company makes a mistake and causes damage during a project.
Ultimately, general liability insurance in Utah acts as a safety net, allowing businesses to operate with confidence, knowing that they are protected against unforeseen events and legal challenges.
How Does General Liability Works?
General liability insurance serves its purpose by shielding businesses against a wide range of legal claims and financial losses. In the event of a covered incident, such as damage to property or injuries to third parties caused by your business activities, the insurance provider will step in to pay for necessary repairs or compensation.
When a business owner files a claim, insurance companies look into the claim to see if it is valid or not. If the insurance company agrees to settle the claim, the policyholder won’t have to pay anything (up to the policy’s maximum, of course). Third-party claims, which involve parties other than the company’s workers, are often covered under the policy. Worker’s compensation insurance is required by law and is not included in this policy; thus, injuries to employees are not covered.
In addition, maintaining coverage requires frequent premium payments. The specific coverage, limits, and premiums depend on the type of business, its size, location, and the level of risk involved in its operations.
What Does General Liability Insurance in Utah Typically Cover?
General liability insurance, also known as business liability insurance or commercial general liability insurance, shields your Utah company from legal action seeking compensation for injuries or property damage allegedly sustained by third parties. Typically, a policy will protect you from:
- Bodily Injury: If someone is injured on your business premises, general liability insurance can cover medical expenses, legal fees, and any settlements or judgments related to the injury.
- Property Damage: If your business causes damage to someone else’s property, such as a client’s home or office, this insurance can help cover the repair or replacement costs.
- Personal and Advertising Injury: This coverage includes protection against claims of slander, libel, copyright infringement, or false advertising.
- Medical Payments: General liability insurance can cover minor medical expenses for injuries that occur on your business premises, regardless of fault. This can help avoid potential lawsuits for small incidents.
- Legal Defense and Judgments: The insurance can also cover the costs of defending your business in court, including attorney fees, settlements, and judgments if you’re sued for a covered claim.
Also, it’s important to note that the specific coverage and limits can vary based on the policy and the insurance provider. Businesses often tailor their insurance policies to their specific needs and risks.
What Business Insurance Am I Required to Get in Utah?
Below is a list of some other common types of general liability insurance in Utah.
#1. Utah Professional Liability Insurance
If you offer professional services and a client suffers a financial loss because of your advice, professional liability insurance can help. Professional liability insurance protects you in the event that a former client or customer files a claim against you, whether justified or not, alleging that they suffered financial damage as a result of your work. The insurance will pay for the costs of investigating and defending the claim, as well as any settlements or judgments that may be awarded.
#2. Inland Marine Insurance
The purpose of inland marine insurance is to safeguard the essential tools you rely on to manage your company. It safeguards your company by paying for the replacement or repair of stolen, lost, or damaged portable machinery. Having inland maritime insurance is a no-brainer if you have a valuable tool collection, expensive building supplies, or other equipment you move to a job site. Coverage for up to $5,000 in business property and equipment is provided through Thimble’s inland marine insurance, which we call Business Equipment Protection.
#3. Utah Workers’ Compensation Insurance
In Utah, workers’ compensation insurance is mandatory for every business with three or more employees. In the event of an on-the-job injury or illness, workers’ compensation insurance can help ease the financial burden for the employee. It also shields you, the business owner, from legal responsibility, should an employee sustain an injury. Worker’s compensation pays for medical bills and lost wages due to the following:
- Disabling incidents that occur on the job, such as repeated stress injuries
- Work-related or occupational illnesses
#4. Utah Auto Liability Insurance
You must obtain auto liability insurance or meet certain self-insurance requirements if you use a car, truck, or van in the course of your business. You and your company can rest easy knowing that auto liability insurance will cover the costs associated with any of the following claims made by third parties as a result of accidents involving your vehicle:
- Physical harm liability: Automobile bodily injury liability insurance protects the other driver and any passengers in their car from financial losses due to your negligence, such as medical bills and funeral fees, if an accident causes physical injury.
- Property damage liability: It’s highly likely that the other vehicle was also damaged in the aforesaid case. The other party’s car will be repaired or replaced up to the limits of your property damage liability insurance.
Additionally, in Utah, a commercial auto insurance policy may be required to acquire the proper coverage and vehicle registration and to avoid penalties, depending on the use of your vehicle, the type of vehicle, or if your vehicle is registered or titled under your business name.
#5. Commercial Property Insurance
Commercial property insurance can provide protection for the structure and contents of your business against theft, vandalism, fires, and natural disasters like floods, hurricanes, and earthquakes. Purchasing a Business Owners Policy (BOP) in Utah can save you money on both general liability and commercial property insurance.
General Liability Insurance Utah Cost
The average cost for a single proprietor in Utah for a general liability insurance policy with a $2 million aggregate limit, $1 million occurrence limit and no deductible is about $28 per month, while the average cost for an LLC is about $50 per month.
As the name implies, the aggregate limit is the maximum sum an insurer will pay out in claims throughout the course of the policy’s term. If you file a claim with your insurance, you may be subject to an occurrence limit, which is the most they’ll pay out in total for all of your claims combined. The deductible is the amount a business owner is responsible for paying before insurance kicks in.
Factors That Impact General Liability Insurance Costs in Utah
There are a number of variables that affect the cost a business pays for general liability insurance in Utah, including:
#1. Regulations Caps
The coverage limitations you choose can have an effect on your premiums. The premiums are proportional to the coverage amount, so lowering them can make them more affordable.
#2. Payroll and Employee Count
The cost of a business’s general liability insurance policy could climb if it has a large number of employees and correspondingly high payroll expenses. As an illustration, consider the vast differences in expenses between LLCs and single proprietorships in Utah.
High-risk businesses, including construction, typically have greater costs for general liability insurance in Utah. The following table lists the typical annual premiums for general liability insurance that Utah-based contractors, software developers, and cleaning services carry.
|Industry||Monthly Cost Without Employees||Monthly Cost With 20 Employees|
#4. Location of Business
The cost of business insurance in Utah tends to increase in more hazardous areas, such as those with a higher frequency of natural catastrophes. It’s worth noting that local variations can affect statewide averages.
What Are the Benefits of an LLC in Utah?
Many of the same advantages that come with forming a business are also available to you when you form an LLC in Utah. The IRS will view this as an improvement over your current status as a sole proprietorship. Although anyone can start a business, it requires special precautions to safeguard one’s personal possessions. Here are some of the advantages of switching from a sole proprietorship to a limited liability company:
#1. Tax Advantages
The option to pay taxes however you like is an important benefit of forming an LLC in Utah. In terms of taxation, a single-member LLC is treated in the same way as a sole proprietorship. A multiple-member LLC is treated as a partnership for tax purposes in the same way. Both of these employ pass-through taxation. Furthermore, it is possible for a corporation to be subject to “double taxation,” in which the company itself is taxed and the shareholders who receive dividends are also taxed on their share of the company’s profits. The term “double taxation” refers to the practice of taxing the same profits twice.
At some point, a company may reach a size where the more favorable corporate tax structure becomes a better fit. Fortunately, your company has the option of choosing to be taxed as a corporation. By submitting Form 8832 to the IRS, you can change to a taxation system that better suits your company’s needs.
#2. Capacity to Raise Funds
To expand your business, you may need to recruit more team members or find financial backers. You, as a lone proprietor, may find it challenging to attract outside investment because of your lack of company size. However, forming an LLC demonstrates seriousness about expanding your firm, which will attract more interested parties and funding. Although a corporation would likely be more desirable, forming an LLC is still preferable to doing nothing.
When it comes to deciding who can join an LLC, the sky’s the limit. A limited liability company (LLC) can have a single member or several members, each of which can be a different legal entity. A single LLC can have several owners, including individuals, businesses, and even more LLCs. Pass-through taxation is available to S corporations, similar to that of an LLC; however, there is a cap on the number of stockholders. For LLCs, this restriction does not apply.
#4. Limitations on Personal Liability
Legal action, investors, or creditors claiming anything they can to mitigate losses or recover their investment pose the greatest threat to any organization. Knowing which of your private possessions are business assets and which are not is crucial for keeping your non-business assets safe. You can safeguard your financial assets, property, and family against potential thieves.
When starting a business, this is the most important thing you can do, and while you can do it as a corporation, an LLC also has other benefits.
Best General Liability Insurance in Utah
Utah may be one of the least populous states, but its business sector is booming.
According to the SBA, there are somewhat more than 300,000 small enterprises in the state. They account for more than 99% of the state’s businesses, making up a sizeable share of the economy. Nearly 46% of the state’s workforce is employed by small businesses.
Common to all businesses of whatever size is the potential for harm to employees or customers, property damage, or other mishaps. Businesses can protect themselves from the financial fallout of a lawsuit by purchasing general liability insurance.
A Business Owners Policy (BOP) is a common type of insurance policy that includes protection against legal claims made against a company. We researched numerous general liability insurance companies in Utah before settling on these as the best.
#1. Simply Business: Best for Finding Cheap Coverage From Solid Carriers
Simply Business is an online brokerage that focuses on helping local businesses. Their competitive edge is that they work with a variety of highly-regarded general liability insurance companies that have high ratings for both financial stability and affordability. That’s why they’re so great for comparing general liability insurance quotes and finding the best price.
Simply Business will have various estimates from its partners ready for you when you fill out their form. Some of the companies they work with as carriers may not be household names, but they provide quotes that are much more reasonable than what you’d find elsewhere.
Getting many quotes and comparing them is quick and easy to do online. You can find the most affordable option in about ten minutes. On Trustpilot, customers have given Simply Business a high rating.
#2. Hiscox: Best for Small Businesses With Unique General Liability Insurance Needs
As a market leader in SMB insurance, Hiscox provides comprehensive protection for companies of all sizes.
Getting business insurance in Utah is a breeze with Hiscox’s straightforward online shopping experience. You can also consult with expert insurance professionals who can tailor a policy to your company’s specific requirements. Hiscox also has first-rate customer service, including speedy quote turnaround, immediate policy issuance, and efficient claim settlement.
In addition, choosing Hiscox for the company’s insurance needs in Utah means putting your faith in a company that has been serving customers since 1901. Hiscox is the preferred insurer for more than 400,000 businesses worldwide.
#3. Liberty Mutual: Best for Growing Companies
The insurance requirements of small businesses are dynamic and constantly changing. Liberty Mutual is the only business insurance company in Utah that can adapt to all of their shifting requirements. They have one of the widest selections of business coverages available, in addition to the standard liability insurance. They can change their rules to fit the requirements of almost any company. In addition, they have experts who are constantly on the lookout for emerging threats to businesses and strategies to effectively mitigate them.
Liberty Mutual is not only one of the largest insurance companies in the United States and the world but also a Fortune 100 company recognized for its financial stability and innovative business practices. Liberty Mutual has the financial resources to pay for any claims that may be filed, so you can rest easy.
It is also prominent for its dedication to workplace safety. If you follow them, you could be able to reduce your yearly cost of general liability insurance in Utah.
#4. Chubb: Best for Companies That Have Industry-Specific Insurance Needs
When it comes to property and casualty insurance, Chubb is peerless.
Chubb has made it a priority to learn about and assess the risks faced by companies in a wide variety of sectors, including technology, healthcare, and real estate. As a result, you can combine your Utah business general liability policy with other coverages (Chubb offers more than 30 of them) to cover the risks that almost any business in any industry faces.
Chubb has developed programs to lower workplace dangers and can provide guidance on how to do so since its specialists have a thorough awareness of the risks faced by firms across many different industries. Reducing risks is not only the moral thing to do but can also save money on insurance for your company in the form of cheaper premiums for things like general liability coverage.
#5. The Hartford: Best for Businesses Looking for a Sound and Ethical Insurer
The Hartford is among the United States’ oldest companies still in operation today. It has been in the insurance business for almost 200 years and has assisted over a million enterprises. Furthermore, the Ethisphere Institute has recognized the company as the World’s Most Ethical Company a total of twelve times, which the company is quite proud of. The Hartford is a reputable firm because of its long history and commitment to conducting business honestly.
Also, The Hartford’s small business team is well-versed in commercial insurance and ready to advise business owners on their options for business liability and other forms of commercial insurance in Utah. The Hartford is a reliable, powerful, experienced, and ethical insurance company, so you can feel good about sending your business to them.
What Is Not Covered Under Commercial General Liability Insurance?
Commercial general liability insurance typically does not cover several specific types of risks. Here are some common exclusions:
- Professional Errors: Claims arising from professional mistakes or negligence are not covered. Businesses requiring coverage for professional errors often need professional liability insurance.
- Employee Injuries: Employee injuries are generally not covered under general liability insurance. Workers’ compensation insurance is designed to cover workplace injuries and illnesses.
- Intentional Acts: Deliberate and intentional acts, such as fraud or assault, are not covered. The policy is meant to protect against accidental occurrences, not intentional misconduct.
- Contractual Disputes: Disputes arising from a breach of contract are usually not covered. Businesses may need additional coverage like a contract liability policy.
- Product Liability: While general liability insurance covers damage or injuries caused by your services, it might not cover damages resulting from products your business makes or sells. Product liability insurance is specific to such situations.
- Pollution: Environmental damage and pollution-related claims are typically excluded. Businesses needing coverage for pollution risks require specialized pollution liability insurance.
- Employment-related Claims: Claims related to employment issues like discrimination, harassment, or wrongful termination are not covered. Employment practices liability insurance (EPLI) is needed for such risks.
It’s essential for businesses to carefully review their insurance policies, understand the exclusions, and consider additional coverage or specialized policies to fill any gaps in their liability protection.
Is General Liability the Same as Liability Insurance?
Yes, both “general liability insurance” and “liability insurance” typically refer to the same form of protection. In the event of bodily injury, property damage, or other obligations, general liability insurance can protect the insured from financial hardship. It’s meant to shield companies from financial ruin in the event that they face a negligence or accident-related lawsuit.
Therefore, when discussing protection against legal action, general liability insurance is the type of coverage that is usually intended. It’s important to remember, though, that different liability insurance plans serve different purposes, such as product liability insurance, employment practices liability insurance, and professional liability insurance. Despite their differences, all of these plans can be grouped together under the umbrella term “liability insurance.”
Is Utah Good for LLCs?
Yes, Utah can be a good and favorable state for forming a Limited Liability Company (LLC). It offers a business-friendly environment with a simple and efficient registration process. Utah’s legal system provides strong insurance coverage for business owners, and the state’s relatively low tax rates can be advantageous for LLCs. Additionally, Utah allows flexible management structures and profit distributions, accommodating various business needs. The state’s pro-business policies and initiatives make it attractive for entrepreneurs seeking to establish an LLC.
However, the decision to form an LLC in Utah should be based on your specific business goals, industry, and circumstances. It’s advisable to consult with a business advisor or attorney to ensure that forming an LLC in Utah aligns with your business objectives.
Yes, general liability insurance is often worth it for businesses in Utah, as it provides essential coverage against various risks. This insurance can safeguard your business from unexpected expenses related to accidents, property damage, or legal claims. In Utah, as in any other state, businesses can face liabilities from incidents such as customer injuries, property damage, or advertising disputes. General liability insurance helps cover medical expenses, legal fees, settlements, and judgments that may arise from such situations.
Having general liability insurance can offer peace of mind, allowing you to focus on running your business without worrying about significant financial losses in the event of a covered claim. It’s crucial to assess your business’s specific risks and consult with insurance professionals to determine the appropriate coverage for your needs. Ultimately, the coverage and potential cost savings provided by general liability insurance in Utah often outweigh the premiums paid.
Frequently Asked Questions
What falls under general liability?
You and your business are protected against claims of personal injury and property damage caused by your operations and products by purchasing general liability insurance. It could also protect you in the event that you are found responsible for repairs to your landlord’s property.
Do I need insurance for my LLC in Utah?
Although Utah law does not specifically mandate it, it is beneficial for businesses to have additional insurance such as general liability, professional liability, or a business owner’s policy (BOP). Before signing a contract or lease, it is not uncommon for a client or landlord to demand proof of business insurance.
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