General liability insurance prices vary more than most buyers expect. Different types of businesses obviously pay higher rates. A low-risk trade such as a self-employed bookkeeper can expect to pay around $40 a month for coverage. By comparison, a roofing contractor with $300,000 in annual sales can expect to pay around $250 per month for insurance. 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. So the figures below reflect what buyers in different industries actually pay.Average liability insurance cost by policy type
| 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 |
General liability insurance costs by business type
| 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 |
The factors affect liability insurance premiums
Insurance carriers assign each business to a class code based on its activities. That class code determines the base rate. For example, 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. Carriers use years of experience working with contractors and convert that information into how they price risk.Revenue, payroll, and number of employees
These are the three most important factors in determining cost after the type of work you are performing. More revenue means more projects, more subcontractors, more exposure. More payroll means more employees in the field. At renewal, carriers audit payroll and sales figures. 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 a significant general liability claim in the past three years will pay more than an identical business with none. More claims make the situation worse. In many instances, carriers will decline to quote a business with a poor claims history.A clean claims record lowers premiums. A well-run contractor takes the time and effort to operate safely and efficiently. As a result, experienced contractors often absorb smaller incidents out of pocket rather than filing a claim that follows them for years.Coverage limits and deductibles
Coverage limits and deductibles are variable amounts that the contractor controls when purchasing a general liability policy for their business. It makes sense that if you choose more coverage, you will pay more. Likewise, the lower the deductible, the more the policy will cost. You need the right combination. Sometimes contract requirements will dictate the amount of coverage required. If there are no contract requirements, the limits are up to you based on your financial situation and how risk-averse you are.Location
Where your business is located also matters. New York, as a result of large verdict sizes, is one of the most expensive places to do business. Others have more litigation and stricter statutory requirements that place additional burdens on contractors, which produce higher premiums. For that reason, the same roofing company operating in Texas versus Oregon may see meaningfully different rates even with identical revenue and claims history.Subcontractor practices
One of the many questions you will be asked is about your use of subcontractors. You will be asked whether you use subcontractors. If you use subcontractors, are they required to have their own insurance? In practice, auditors often treat uninsured subcontractor labor as the general contractor’s own payroll. Getting current certificates of insurance from every subcontractor, with additional insured status, keeps that cost where it belongs: on the subcontractor’s policy.What coverage does general liability provide?
General liability insurance protects the policyholder if they are found legally responsible for a covered claim. These claims are from injuring a third party or damaging their property, such as objects falling off a roof and causing bodily injury or property damage. It does not cover the policyholder’s own injuries or property.The three components are.- 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 in the case of a covered claim, regardless of whether the claim is ultimately paid out.
What is excluded from coverage from General Liability policies?
You need to educate yourself on what general liability covers. One of the most important things is that employee injuries on the job are covered by workers’ compensation, not general liability. Professional services errors require 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 industry-specific exclusions 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 will vary 20 to 30 percent across insurers. An independent broker like FarmerBrown.com with access to multiple markets will surface that range. A quote from a captive agent or from a broker with limited markets will not.When your business uses subcontractors, they need to provide a certificate of insurance before they start work or set foot on the job site. If you do not get a certificate of insurance at the start, you run the risk of having uninsured subcontractors on the job. You will also have to at some point have to obtain a copy for your records. It is a best practice to do this at the start rather than months laterCombining general liability and commercial property with one company into a Business Owner Policy, which typically costs less.Raising the deductible works if the business has the cash reserves to support it. For that reason, a $2,500 deductible on a general liability 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.Usually, small incidents you can handle directly, without involving the carrier, are cheaper to absorb than the premium increase that follows a filed claim.What to check before buying a liability insurance policy
It should go without saying, but you need to read your policy. Make sure everything your business needs is covered.- Also, read the policy exclusions carefully. If your general liability policy doesn’t cover the exposures your business faces, you have wasted your money if a claim arises and it isn’t covered.
- The limits of the general liability policy should be well thought out. Consider your business’s financial situation and actual needs, not just a box-checking exercise to meet contractual obligations.
- Know how quickly your agent can provide a certificate of insurance. At FarmerBrown.com we can typically get you insured in around 4 hours and certificates of insurance in under an hour for existing accounts.
Frequently asked questions.
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.
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 about $3,000 annually, depending on claims history, state, and subcontractor practices.
Usually, one of three things is true: 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 not competitive for that industry. A broker review across multiple carriers will confirm which applies.
- Try getting quotes from multiple carriers. If you shop through FramerBrown.com, we will provide at least 3 different quotes in most cases.
- Collect insurance certificates from each subcontractor before work starts.
- Consider raising the deductible if you can afford it.
- Stop filing small claims that can be resolved without the involvement of your insurance.
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.
No. That is workers’ compensation. In other words, the two policies cover different people: GL covers third parties; workers’ comp covers employees.
General liability covers physical harm to others. By contrast, professional liability covers financial losses resulting from mistakes or failures in professional services. A contractor who drops a tool through a client’s window has a GL claim. If you are an architect and your plans cause a structural failure, you have a professional liability claim.
FarmerBrown.com issues certificates within four hours of binding. We also offer same-day quotes for most business types across all 50 states.
