Best Liability Insurance Providers For Small Business 2023

If you’re a small business owner, you have plenty of options when it comes to business insurance. General liability insurance is a kind of business insurance that helps protect a small business financially if it harms or is accused of harming a person or their property.

Businesses of all sizes, from sole proprietors to corporations, typically need commercial general liability insurance coverage. All major commercial insurance companies sell business liability insurance, either on its own or as part of a business owner’s policy.

Buying insurance might seem like just another task on your to-do list, but having the right coverage from a good company will pay off if you ever have a claim.

Overview of liability insurance

Small business owners put their personal finances at risk in the event of a business-related lawsuit. Partnerships and sole proprietorships are particularly vulnerable to exorbitant expenses and are consequently in the greatest need of this type of insurance coverage. Even under the structure of a limited liability corporation (LLC), an owner may still be exposed to personal risk.

Sometimes called “general liability insurance” or “commercial general liability insurance”, business liability insurance is a type of small business insurance that covers your business for accidental injuries and property damage caused to others. It also covers other problems such as advertising injury, copyright infringement, and reputational harm.

Business liability insurance protects a company’s assets and pays for legal obligations. These can include medical costs incurred by a customer who gets hurt on store property, as well as any on-the-job injuries sustained by employees.

These types of claims may result from your company’s products, services, or operations. Without general liability insurance, you could end up paying out of your business’s income and, in a worst-case scenario, even go bankrupt.

What classifies as a small business?

The U.S. Small Business Administration (SBA) defines a small business as an independent business that has fewer than 500 employees. However, this definition can vary by industry.

For insurance purposes, only small- to medium-sized businesses that meet certain requirements are eligible for a BOP, according to the III. Insurers may consider several factors when assessing whether a business is eligible for a BOP, which include:

Ownership structure

The ownership structure of a business can also impact its classification as small, according to the SBA. In some cases, insurance providers may consider factors such as whether the business is independently owned and operated or part of a larger corporate entity.

Number of employees

One of the primary factors used to classify a business as small is how many people it employs. Typically, businesses with fewer than a certain number of employees are considered small. The threshold is determined by the insurance provider and can range from a handful of employees to several hundred, depending on the industry and the specific insurance policy.

Industry classification

Certain industries have their own unique standards for defining small businesses. For example, the SBA sets industry-specific size standards based on the number of employees or annual revenue. These standards help determine eligibility for government programs and contracts.

Annual revenue

In addition to the number of employees, the SBA considers the annual revenue of a business when determining its size. Similarly, insurance providers may set a maximum revenue threshold for small businesses.

It’s worth noting that the definition of a small business may differ among insurance providers, so it is essential to carefully review your policies and consult with your insurance providers to ensure you meet the specific requirements for coverage.

Types of liability insurance for small business

Liability insurance protects small businesses from legal claims and financial losses resulting from third-party injuries, property damage, or lawsuits. It covers legal defense costs, settlements, or judgments if the business is found legally liable for causing harm or injury to others.

This type of insurance is crucial for businesses that interact with customers, clients, or the public and helps protect their financial interests in case of accidents, injuries, or property damage claims.

General liability insurance

General liability insurance, also known as business or commercial liability insurance, is essential coverage for various claims, including bodily injury, property damage, personal or advertising injury, medical payments, products-completed operations, and damages to premises rented to you.

Virtually every small business owner or contractor should have some form of general liability insurance. When buying small business insurance and comparing policies, keep in mind that your rates will depend on your business’s specific features.

Business Owners Policy (BOP)

If you want general liability insurance and property coverage, you can package them together in a business owner’s insurance policy, also known as a BOP. A BOP provides liability coverage for customer injury, property damage, and product-related claims, in addition to commercial building and movable property coverage.

Many BOPs also include business interruption coverage, which pays your lost revenues if you close for a covered claim. This coverage type is ideal for owners of small and midsize businesses like restaurants, retail stores, and wholesalers. Keep in mind that BOP insurance doesn’t cover your employees.

Professional liability insurance

Professional liability insurance, also known as errors and omissions (E&O) insurance, protects businesses that offer professional services. B2C businesses often use E&O coverage to protect against claims stating their services caused clients financial distress or bodily injury.

Doctors’ malpractice insurance is a common type of professional liability insurance. This insurance type is also essential for professional service providers like consultants and financial advisors. Costs for professional liability insurance will vary depending on the industry and profession. For example, a doctor would likely pay more than a CPA.

Employment Practices Liability Insurance (EPLI)

Small businesses with employees often benefit from employment practices liability insurance. This insurance type protects you if an employee files a claim against you for wrongful discipline or termination, sexual harassment, discrimination, negligent evaluation, breach of employment contract, mismanagement of employee benefits, or wrongful infliction of emotional distress.

Some insurers offer EPLI as stand-alone coverage, whereas others offer it as an endorsement to their BOP. Your policy’s terms and conditions will depend on the coverage you choose. Your business type, number of employees, and various risk factors all play a part in the cost of EPLI.

Product liability insurance

Product liability insurance provides more protection and security than a standard product warranty or guarantee. This coverage protects your business if a product causes damage or injury to a third party, or if your business faces a product-related lawsuit.

For example, if your product had a lithium battery that caught on fire, injuring the consumer, they could sue you. Product liability insurance covers you in this instance.

Contractors’ professional liability insurance

If your business is in the design-build or construction management industry, you are required to purchase some form of contractors’ professional liability insurance. This coverage protects professionals against construction errors or losses incurred when designing, engineering and constructing a building.

It can also protect you from errors made by third-party vendors associated with a project.

Management liability insurance

Management liability insurance is a combination of coverages used to protect private, public and nonprofit companies from various board-level exposures. It protects against the risks of managing a business and is purchased by organizations with a board of directors.

A typical management liability insurance package includes coverage for employment practices liability, fiduciary liability and D&O liability.

Directors and officers (D&O) liability insurance

If your small business has a corporate board of directors or advisory committee, you want D&O insurance. This insurance protects your directors’ and officers’ assets if they are personally sued for wrongful acts in company management (e.g., failure to comply with workplace laws, fraud, theft of intellectual property, misrepresentation of company assets, or misuse of company funds).

Best liability insurance providers for small business

Chubb

Chubb has been in the business insurance industry for almost 140 years. Though Chubb is a major national insurer, the carrier still caters to small business owners and features a separate hub on its website just for small business insurance products. The company offers a host of business liability insurance products and services for small businesses across multiple industries.

Small business owners can purchase business owners policies, workers’ compensation insurance, liability coverage, cyber insurance, and umbrella insurance. If the business has a projected annual revenue of $2 million or less, owners can get an online quote through Chubb’s website without going through an agent.

That being said, business owners with other insurance needs must get in touch with a local agent to get a quote. This is because Chubb doesn’t offer online quotes for insurance products not listed in its small business hub.

Travelers

Travelers sells workers’ compensation coverage that adapts to your business needs. The company’s risk control consultants — the people in charge of inspecting and assessing your insurance needs — can do in-person or virtual visits.

Travelers also offers a flexible billing option through TravPay, a pay-as-you-go service that syncs your workers’ compensation premium payments with your payroll processing.

As of 2022, Travelers also holds the largest market share for workers’ compensation policies, as well as the top two positions for commercial auto insurance. These statistics are a strong indicator of its popularity as a commercial insurer.

State Farm

State Farm was awarded 856 out of 1,000 points for customer satisfaction in J.D. Power’s Small Commercial Insurance Study. It offers business insurance designed for independent contractors, restaurants, professional services, and retailers, with paperless billing and autopay options. Insurance products include BOP bundles, surety and fidelity bonds and farm and ranch insurance.

The company’s extra liability coverage includes professional liability, errors and omissions liability, employment practices liability insurance (EPLI), not-for-profit liability insurance with EPLI, and condo and homeowners association directors and officers liability with EPLI.

Other coverage options include:

Commercial Auto
Inland Marine Insurance
Workers’ Comp
Group Life Insurance
Retirement Plans

Nationwide

Nationwide is one of the best small business insurance companies for general liability policies because it allows customers to enhance this coverage through a variety of endorsements, from liquor liability to personal and advertising injury coverage. This allows small business owners to tailor the policy to their specific industry.

Nationwide offers a wide array of products for small business owners, including business liability, commercial property, commercial auto insurance policies and workers’ compensation insurance.

Business owners can supplement Nationwide’s general liability insurance with additional coverage, including:

Fire legal liability: Coverage against claims of negligence if you cause fire damage to a property you rent
Auto liability: Covers short-term auto rentals and employees who use their personal car for business
Umbrella policy: Adds increased coverage beyond the limits of other liability policies
Employment practices liability insurance (EPLI): Coverage against claims of wrongful termination, refusal to employ, invasion of privacy and defamation

Other liability endorsements include product and completed operations liability, directors and officers liability, liquor liability and personal and advertising injury coverage.

Liberty Mutual

Liberty Mutual is one of the best small business insurance companies for umbrella insurance because its base umbrella policy offers up to $25 million in coverage and can be increased to $100 million. This is a great option for companies looking for complete liability protection.

Liberty Mutual’s umbrella insurance provides additional liability coverage beyond the limits of existing policies, including auto, watercraft and homeowners insurance. The company’s umbrella policy also includes crisis management support services, covering up to $250,000 in expenses related to media coverage and public relations consultancy.

Regarding customer service, Liberty’s specialized underwriters are trained to understand complex risks across a variety of industries, and their dedicated complex liability claims unit is experienced in navigating catastrophic losses.

What does small business liability insurance cover?

Business liability insurance covers a business from a variety of possible claims. These include bodily injury, property damage, copyright infringement, reputational harm, and advertising injury.

Bodily injury caused by a business is a common claim. For example, if someone comes to your place of business and is injured, a general liability policy would cover their medical costs. A bodily injury claim could be something as simple as a fall by a customer at a store or office.
Property damage is another common liability claim. Your business may be legally responsible if a person’s property is damaged. Property damage claims could include damage to a client’s home or other property if you are visiting them on business.
Copyright infringement claims come about if you are accused of using someone else’s work in your business ad or other business marketing without their permission.
Reputational harm can happen, for example, if you’re being interviewed by a news outlet and you say something negative about another company that hurts their business.
Advertising injury can happen if your business defames another person, business owner or company.

These types of liability claims are prevalent, so you’ll want to keep your business protected with the right insurance. For example, the average cost of a slip and fall claim is $20,000. And if you face a reputational harm lawsuit, you could be facing $50,000 in costs, according to The Hartford.

A good way to extend your business liability insurance is by purchasing a commercial umbrella insurance policy. This gives you an extra layer of protection from expensive lawsuits.

What does small business liability insurance not cover?

Business liability insurance covers a lot for a business, but it won’t cover business-related auto accidents. This also includes employee injuries and illnesses, damage to your business property, mistakes in professional services, claims that exceed your policy limit, or illegal acts by you or your employees.

For these kinds of problems, you’ll need different types of business insurance, including:

Employee injuries and illnesses: You need workers’ compensation insurance to provide coverage for employee injuries.
Auto accidents: For auto accidents while doing business, a commercial auto insurance policy financially protects you if you own the vehicle. A hired or non-owned auto insurance covers a personal car or a rented car for work.
Professional mistakes. An errors and omissions insurance (E&O) policy provides coverage if you make mistakes in the course of your work. An E&O policy is sometimes called professional liability insurance.
Theft and damage to your business property. General liability insurance won’t cover your business equipment or property against theft or damage. You need a commercial property insurance policy to cover these types of problems.

Insurance won’t cover intentional acts, such as a computer you throw out the window. And general liability insurance won’t help if there are deliberate, illegal acts or wrongdoings by you or your employees.

Cost of small business liability insurance

A business’ perceived risk levels will generally determine its coverage costs. A building contractor who deals with heavy equipment and dangerous machinery, such as cranes and forklifts, for example, will pay more for coverage than an accountant who sits safely behind a desk.

Businesses that fall into the lower-risk category may want to consider a business owner policy (BOP), which combines general liability and property insurance at a more cost-effective rate. Any new or additional business liability insurance policies should contain exclusion clauses to avoid duplication of coverage from competing insurance providers, thereby minimizing costs.

Best Liability Insurance Providers For Small Business 2023

Overview of liability insurance