How Much Does Liability Insurance Cost?
Liability insurance prices vary more than most buyers expect. A solo bookkeeper might pay $35 a month. A roofing contractor doing $300,000 a year in revenue pays closer to $250. The difference comes down to one thing: how likely the carrier is to pay a claim, and how large that claim is likely to be.
Farmer Brown has placed liability insurance for businesses across all 50 states since 1996. The figures below reflect what buyers in different industries actually pay.
Average liability insurance cost by policy type
| Policy type | Typical monthly cost | Typical annual cost | What it covers |
|---|---|---|---|
| General liability | $30 to $60+ | $360 to $720+ | Third-party bodily injury, property damage, and legal defense |
| Professional liability | $50 to $100+ | $600 to $1,200+ | Errors, negligence, or failure to perform a service correctly |
| Product liability | $50 to $150+ | $600 to $1,800+ | Injury or property damage caused by a product sold or manufactured |
| Commercial auto liability | $100 to $250+ per vehicle | $1,200 to $3,000+ | Injuries or damage caused by business vehicles |
| Commercial umbrella | $40 to $100+ | $500 to $1,200+ | Additional limits above a primary policy |
| Workers compensation | Varies by payroll | Varies by state and industry | Employee medical bills and lost wages from a job-related injury |
These are baseline figures for businesses with standard limits and no recent claims. Each variable in a specific policy can increase or decrease the number.
General liability insurance costs by business type
| Business type | Typical annual GL cost | Notes |
|---|---|---|
| Consultant or IT freelancer | $400 to $700 | Low physical risk; professional liability often needed separately |
| Cleaning company | $1,500 to $2,000 | Slip and fall and property damage exposure |
| Landscaper | $700 to $1,500 | Equipment use and third-party property damage |
| Barbershop or salon | $921 to $1,230 | Customer injury and product liability considerations |
| Restaurant | $2,149 to $3,284 | Liquor liability, slip and fall, and food contamination risks |
| Food truck | $700 to $1,800 | Similar to a restaurant, mobile operations add complexity |
| Fitness or pilates studio | $4,000 to $4,500 | Higher exposure from physical instruction and client injury risk |
| General contractor | $1,600 to $5,000+ | Approximately 0.75% of annual revenue; $1,600 minimum |
| Roofing contractor | $2,800 to $10,000+ | Approximately 1% of annual revenue; $2,800 minimum |
| Trucking company | Varies widely | Depends on radius, cargo type, and fleet size |
| Retail store | $965 to $1,329 | Customer injury and property damage exposure |
Contractor pricing differs from that of most other businesses. Rather than a flat monthly rate, carriers price GL for contractors as a percentage of annual revenue or payroll. A general contractor doing $500,000 in revenue pays more than one doing $150,000, even if everything else about their business is identical.
What factors affect liability insurance premiums
The type of work is the starting point for every quote
Carriers assign each business to a class code based on its activities. That class code determines the base rate before anything else is considered. A plumber and a roofer are both contractors, but their rates differ because their industry-wide claim histories differ. Roofing carries more liability exposure, so roofing insurance costs more. This is not negotiable. It is baked into how carriers price the risk.
Revenue, payroll, and headcount
These three travel together for contractor pricing. More revenue means more projects, more subcontractors, more exposure. More payroll means more employees in the field. Carriers audit payroll figures at renewal. If the numbers provided at the start of the policy were lower than the actuals, the difference is due as an audit premium, usually in a lump sum.
Claims history
A business with one significant GL claim in the past three years will pay more than an identical business with none. Two claims in that window are worse. Some carriers will decline to quote at all. A clean claims record is worth real money at renewal, which is why experienced contractors often absorb smaller incidents out of pocket rather than filing a claim that follows them for years.
Coverage limits and deductibles
A $2 million per-occurrence limit costs more than a $1 million limit. A $500 deductible costs more than a $2,500 deductible. These are the two variables a buyer has the most direct control over. The right combination depends on cash flow, contract requirements, and how much risk the business can absorb without using the policy.
Location
States with higher average verdict sizes, more litigation, or stricter statutory requirements produce higher premiums. The same roofing company operating in Texas versus Oregon may see meaningfully different rates even with identical revenue and claims history.
Subcontractor practices
Carriers want to know how much subcontracted work there is and whether those subs carry their own insurance. Uninsured subcontractor labor often gets treated as the general contractor’s own payroll during audits. Getting current certificates of insurance from every subcontractor, with additional insured status, keeps that cost where it belongs: on the subcontractor’s policy.
What liability insurance actually covers
Liability insurance pays costs when the policyholder is found legally responsible for injuring someone or damaging their property. It does not cover the policyholder’s injuries or property.
Three components appear in most policies. Bodily injury liability pays the injured party’s medical bills, lost wages, and related costs. Property damage liability pays to repair or replace property the policyholder damaged. Legal defense costs cover attorney fees and court expenses regardless of whether the claim is ultimately paid out.
What a GL policy does not cover is where most surprises happen. Employee injuries on the job are covered by workers’ compensation, not general liability. Mistakes in professional services need a separate professional liability policy. Damage to the policyholder’s own work or materials is typically excluded. Pollution liability requires its own endorsement. Roofing contractors, restaurant owners, food truck operators, and trucking companies all face exclusions specific to their industries that are worth reviewing before a claim makes them relevant.
How to pay less for liability insurance without dropping coverage
Shopping multiple carriers is the fastest way to find a better rate. Prices for identical coverage can vary 20 to 30 percent across insurers. An independent broker with access to multiple markets will surface that range. A single carrier quote will not.
For contractors and businesses that use subcontractors, keeping certificates of insurance current and accurate directly lowers premiums. The cost of chasing that paperwork is minor compared to the audit premium for not having it.
Bundling policies with a single carrier often results in a discount. General liability and commercial property combined in a Business Owner Policy typically cost less than the two policies purchased separately.
Raising the deductible works if the business has the cash reserves to support it. A $2,500 deductible on a GL policy can meaningfully reduce the annual premium. For businesses that have gone three or more years without filing a claim, it is usually worth the calculation.
The most reliable long-term cost control is keeping claims off the record. Small incidents that could be handled directly, without involving the carrier, are often cheaper to absorb than the premium increase that follows a filed claim.
What to check before buying a liability insurance policy
Read the exclusions before the coverage limits. Limits tell you the best-case payout. Exclusions tell you when the policy will not respond at all. A policy that excludes a risk category central to your business is not real coverage, regardless of the limit printed on the declarations page.
Confirm that coverage limits reflect actual exposure, not just the minimum required by a client contract. Contract minimums protect the client. They may leave the business underinsured in the event of a serious claim.
Check how quickly the agency issues certificates of insurance. Most project owners and general contractors require a certificate before work starts. Farmer Brown issues certificates within four hours of binding coverage.
Frequently asked questions about liability insurance cost
How much is liability insurance per month for a small business?
Low-risk businesses typically pay $30 to $60 per month. Contractors, restaurants, and other higher-risk operations pay more, often starting at $130 or more per month.
What does a general contractor pay for GL insurance?
The rate is approximately 0.75 percent of annual revenue, with a floor around $1,600 per year. A contractor doing $400,000 in revenue would typically pay in the range of $3,000 annually, depending on claims history, state, and subcontractor practices.
Why is my liability insurance so expensive?
Usually one of three things: the type of work puts the business in a high-rate class code, there are prior claims on record from the past three to five years, or the current carrier is simply not competitive for that industry. A broker review across multiple carriers will confirm which one it is.
How can I lower my premium?
Get quotes from at least three carriers. Collect insurance certificates from each subcontractor. Consider raising the deductible if cash flow supports it. Stop filing small claims that could be handled directly.
Is general liability insurance required by law?
Not universally, but most states require it for contractor licensing, and most clients require it as a contract condition. In practice, a contracting business cannot operate without it.
Does general liability cover employees who get hurt on the job?
No. That is workers’ compensation. The two policies cover different people: GL covers third parties, workers’ comp covers employees.
What is the difference between general liability and professional liability?
General liability covers physical harm to others. Professional liability covers financial losses resulting from a mistake or failure in a professional service. A contractor who drops a tool through a client’s window has a GL claim. An engineer whose calculations cause a structural failure has a professional liability claim.
How quickly can I get a certificate of insurance?
Farmer Brown issues certificates within four hours of binding. Same-day quotes are available for most business types across all 50 states.
