Pricing and costs of business liability insurance vary by area of the country, by industry and even by how long you've been in business. Because the needs of each business vary greatly, so do the amount of insurance your business should have and how much it will cost. But no matter the industry, there are things you can do to maximize your insurance dollars.

Insurance companies base their prices on risk, so the lower your risk, the lower the premium. The insured's previous behavior is the greatest predictor of future losses, so your liability insurance rates will be higher if you've suffered recent losses.

You can put your insurance dollars to work by doing the following:

1. Save on general business liability insurance by preventing losses.

2. Use company affiliations when shopping for business liability insurance quotes.

3. Check for financial stability in your general liability insurance company.

Action Steps
The best contacts and resources to help you get it done

Avoid losses to save on your corporate liability insurance costs

When it comes to insurance, you can save money by not having losses. A company with recent losses may pay twice as much for the same coverage compared to a similar company that hasn't had a claim. Further, all businesses in a given industry are categorized according to the general risk, so look at the information available to your insurance company about your industry.

I recommend: Obtain data about loss figures for your industry from the Bureau of Labor Statistics. A handy online tool can help you compare the different industries and how liability insurance companies rate them based on risk. Then, look into loss prevention. You can find a variety of loss-prevention topics available as a "webinar" from Liberty Mutual.

Save money on company liability insurance with your group memberships

Providers of business liability insurance offer group savings to trade associations for their insurance products. Check to see if you can take advantage of one of these special group rates.

I recommend: Use your relationships with national trade associations to get discounts on your business insurance through Allstate. Or, you can save up to 10% on business insurance through Safeco with your Costco membership.

Check the solvency of liability insurance providers you're considering

It's not just the cost of the insurance that's important, but also the solvency of the company. If the company isn't around to take care of your claim, that low rate you got means nothing. So check the solvency of the liability insurance companies you're evaluating.

I recommend: A.M. Best is well known for providing ratings for insurance companies based on their solvency. Standard and Poor's also collects data and determines solvency for insurance companies. In addition, you can check for complaints and their resolution through the insurance department in your state, courtesy of the Insurance Information Institute.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Enjoy top company liability insurance savings by keeping your credit score high and not making claims.

You’ve worked long, hard hours to build your business into a profitable enterprise. Now you need to protect it with general liability insurance that will cover such instances as the following: a customer trips on the carpet in your shop; a client injures herself using your product; an employee breaks a 17th century antique while on the job; or a coffeemaker left on overnight ignites a fire and damages your landlord’s building and other tenants’ property.

Here are three things you need to know:

1. General liability insurance usually covers medical expenses, legal fees and damages when you’re legally responsible.
2. Umbrella liability insurance protects your business from liability claims above and beyond your general and auto liability limits.
3. A business owner’s policy, or BOP, is an affordable package that combines general liability and property coverage – perfect for small to medium-sized, low-risk businesses.

Action Steps
The best contacts and resources to help you get it done

Surf the Web for the best deals

Insurance search engines will comb hundreds of sites and offer instant quotes from multiple agents. General liability and property packages are competitively priced, but premiums do differ for small business policies.

I recommend: Try Insurance Finder, LowQuotes.com or InsuranceNoodle, which work with prescreened insurance professionals nationwide and offer free quotes.

Decide what you need

Depending on what industry you are in, your needs for various types of liability insurance will vary.

I recommend: Insure.com has a handy tool that lets you scroll a list of occupations – from accountant to pet groomer to Web designer – then will instantly recommend what liability insurance you may need based on the risks your business faces. For example, for freelance writers who work at home it recommends an add-on to homeowner's insurance to cover lawsuits. The Web site also defines types of business coverage – from accounts receivables to parking lot liability.

Check out the giants

Discover what major insurance companies are offering. This gives you a base by which to compare all the others – and you may decide to stick to the tried-and-true companies.

I recommend: Go to State Farm to find an agent who can sell you nine types of business liability insurance, including, cyberspace liability and employment practices liability which covers sexual harassment and wrongful termination. Zurich for North America is a Swiss-based company that's been providing insurance for small businesses for 100 years. Nationwide will analyze your needs and customize a plan.

Go with someone who knows your industry inside out

If you go to an insurance company that specializes in your field, you'll deal with agents who know exactly what the unique issues are in your area and be able to help you with niche problems. If you're in high-tech, buy from a company with high-tech experience.

I recommend: Techinsurance.com is an e-agent specializing in serving tech companies. InsureWithWalker specializes in rates for builders and construction industry trades. Nationwide offers liability insurance for agribusiness and farms.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Pay attention to the time frame your policy covers. Not all mistakes will be discovered at the time they're made. It may be years before the effects of bad financial advice or a computer error surfaces.
• •  Trade associations such as the Chamber of Commerce often offer group rates.
• •  Scrutinize policy details to find out if and how much legal fees are covered.

Businesses can protect themselves from lawsuits with proper business liability insurance. From products on the shelves to employee mishaps, insurance remains an important necessity on the business scene. The type of business you have dictates your vulnerabilities and insurance needs. For example, insurance for product deficiencies isn't a concern if you're a consultant, but errors and omission insurance is paramount.

Liability insurance quotes should be based on your company's unique situation. Many insurance companies specialize in fields such as technical companies or medical offices, so these companies may be better prepared to meet your needs. Over the long haul, it's important to make sure that you're properly insured so that if a loss does occur, you're covered and can continue your business.

Find out why making the most of business liability insurance will save you money in the long run by doing the following:

1. Get a business owner's policy or commercial package policy with proper corporate liability coverage.

2. Ensure that you have proper liability insurance on the road.

3. Consider endorsements to be added to your general business liability insurance to cover additional needs.

Action Steps
The best contacts and resources to help you get it done

Get the business coverage you need from liability insurance companies

Whether a business owner's policy (BOP) for a small business or commercial package policy (CPP) for your larger or more specialized business, get the corporate liability coverage you need. Protection for your business includes most liability for damages caused by you or your employees and from most occurrences on your premises.

I recommend: The Hartford offers a customized approach to determining what types of coverage you need for your business. By taking the online survey, you can identify liability issues you need to cover for your business. You can get results immediately or have more in-depth answers sent to your e-mail address. Nationwide Insurance has a similar link to identify and assess the risks associated with your specific line of business.

Supplement your company liability insurance coverage with appropriate auto coverage

Even if your employees possess their own auto insurance coverage, if they use a vehicle during company hours for business, you need to provide auto liability coverage. Your coverage can be as simple as adding an extra insured driver, but be sure to protect your business assets with the right insurance coverage. If an accident happens, your business can be held accountable.

I recommend: Although having only the minimum coverage isn't recommended for a business, you can check Insure.com to make sure you and your employees have at least the minimum required coverage for your state. Progressive Insurance provides a checklist outlining the circumstances under which you need business versus personal liability insurance for your automobiles.

Plug holes in your general liability insurance coverage with endorsements

Make sure your business is completely covered with riders or endorsements to your corporate liability insurance. These can include directors and operators, errors and omissions, worker's compensation and even umbrella (excess) insurance coverage. Many of these have higher limits or cover events that your basic business liability policy doesn't cover.

I recommend: MSN Money offers an insurance evaluation to assess your business insurance needs, such as errors and omissions insurance, and makes recommendations based on your unique situation. For long-term reference, purchase a copy of "Commercial Liability Insurance" from the Insurance Risk Management Institute to compare your risks versus your coverage. This book discusses liability coverage and the gaps it can leave, and recommends other coverage to fill those needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you have a home-based business such as a home day care, your company liability insurance is normally excluded from your homeowner's insurance policy. Talk to your insurance agent about a special rider or endorsement to cover liability arising from a home-based business.

Accidents happen. That's why it's important to prepare for the worst. All business owners should protect their livelihood by selecting the right liability insurance coverage appropriate for their business. Insurance representatives can evaluate your needs, but it's your responsibility to have all your bases covered.

Choosing the right liability insurance can be complex and intimidating, especially if you don't know the jargon. Get to know the terms you'll be encountering when comparing policies and reading the fine print, so you can acquire adequate coverage.

Action Steps
The best contacts and resources to help you get it done

General liability insurance

Business owners must protect themselves from general claims of liability, or fault, that arise out of ownership of property, such as customers falling in the parking lot or damage caused by an employee. A general liability insurance policy covers these everyday instances.

I recommend: Check out this definition from CompuQuotes.com.

Umbrella liability insurance

A so-called umbrella liability policy, as its name suggests, covers many 'leaks' not addressed by your general liability coverage. Umbrella liability coverage is most commonly needed in situations considered 'catastrophic'; it helps pay the bill when the general liability insurance runs dry.

I recommend: Diversified Insurance Services provides examples of umbrella liability insurance and factors to consider when purchasing a policy.

Business owner's policy (BOP)

Instead of buying several small policies, a business owner can purchase a business owner's policy that covers a variety of situations. Many small-business owners find business owner's policies to be particularly simple and inexpensive compared to other options.

I recommend: Review what a typical BOP includes at FreeAdvice.

Commercial package policy (CPP)

Unlike the prepackaged BOP, a commercial package policy lets the policy holder customize the coverage to meet unique needs. A CPP provides two or more different forms of insurance, usually set at a lower premium for buying them together.

I recommend: InsuranceNoodle answers questions you may have regarding a commercial package policy.

Employment practices liability

An employment practices liability policy protects your business against sexual harassment, discrimination and wrongful termination lawsuits or any other claims by employees that their rights were violated.

I recommend: The Insurance Information Institute explains the kind of protection granted through an employment practices liability policy.

Cyberspace liability

Computer losses and other Internet issues are covered under cyberspace liability. Intellectual property rights as well as software and hardware data losses can be covered. Check to make sure your general liability insurance policy doesn't already cover this aspect of business.

I recommend: The Toolkit Media Group gives examples of specific types of businesses that may need a specialized cyberspace liability policy.