The Best Business Liability Insurance Providers of 2020

By Chad Brooks,
business.com writer
| Updated
Jun 02, 2020
Image Credit: fizkes / Getty Images

Update: This page has been updated with more answers to some new frequently asked questions.

While there are many ways business can cut corners when trying to save a few bucks, insurance is one area they shouldn't be trying to skimp on. Business liability insurance provides businesses with a safeguard should something unexpected happen. Not having that protection isn't something you want to take a risk on. 

 

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The Hartford
The Hartford
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Business liability insurance, also known as commercial general liability insurance, provides businesses with a layer of protection from a number of situations. This includes any injury or damages that occur on a business's property that anyone associated with the business may have caused. 

Workers' compensation insurance is another vital policy most businesses need. This type of insurance protects businesses from any lawsuits employees who are injured on the job may bring.   

Knowing how important these types of insurance policies are, we researched a number of different providers to determine the ones we think are best for different situations.

Editor's note: Looking for the right liability insurance for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

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Benefits and Importance of Business Liability Insurance

Business liability insurance is a critical policy for most businesses. It protects you from a wide variety of potential issues. Specifically, these policies cover bodily injury to others who come into your business. This could be a customer in your retail store or a client in your office. In addition to injury, general liability insurance protects against damage to the property of anyone who comes in your store, office, plant or any other type of business location. In both of these instances, the business liability insurance can cover any legal or medical costs you incur from lawsuits filed against you.

Besides protections against claims from clients, customers or other visitors to your business, business liability insurance protects against advertising injury. This refers to claims of false advertising, libel, slander or copyright infringement. For example, if you put out an ad that mentions one of your competitors in a negative light and they sue you with a claim that the ad negatively impacted their business, your insurance can protect you from the costs of defending yourself.

Whether you win or lose, such lawsuits can be extremely costly and time-consuming, taking your focus away from generating revenue. This can be devastating for a small business, so general liability insurance is extremely important. Small business liability insurance allows you to focus on your business even when you're facing a claim of damage, injury or negligence.

Another benefit of business liability insurance is protection against damage to property you rent. If any equipment or other property is damaged by fire, lightning or an explosion, your insurance will cover the costs.

There are several other types of liability policies that some businesses may benefit from, including these policies:

  • Professional liability insurance: This is designed for businesses that provide professional services for clients. Also referred to as E&O (errors and omissions) insurance, this type of policy covers businesses that are being sued for negligence in the services they provide. Basically, professional liability insurance covers businesses that are sued for making a mistake with a client, whether the claim is founded or unfounded.
  • Management liability insurance: This is designed to cover businesses in instances where managers are sued for things like breach of responsibilities or wrongful termination. It includes more specific policies like directors and officers (D&O) liability, fiduciary liability, and employment practices liability.
  • Cyber liability insurance: This protects your business from the expenses associated with things like computer hacks and data breaches.

New research from Chubb shows the importance of cyber liability insurance. According to the new report, the number of ransomware attacks in 2019 has already surpassed all of those for 2018. Overall, malware claims with Chubb, which include ransomware, have risen to 18% of all cyber claims in 2019. That's up from an average of 12% over the past five years. Additionally, Chubb reports that ransomware has accounted for 23% of its cyber claims for smaller businesses in 2019.

When you're deciding which types of liability insurance you may benefit from, the first thing to consider is your type of business. How large is your organization? What is its legal structure? What industry are you in? Where is your business located? Answering all of these questions will help you determine which liability policies you need to properly protect your business.

You don't have to figure this all out on your own. Don't hesitate to talk to various insurance agents to get their take. Give them all of the details on your business and how it operates, and they will be able to make recommendations based on their industry expertise.

How to Choose Business Liability Insurance

There's a wide range of business insurance providers in today's market, which can make choosing the best one for your business a tough process. When looking for an insurance provider, you should take a number of factors into consideration. Here are some of the main points you should look into.

Company Experience

Not all businesses or industries face the same risks, so you'll want to look for a company that has the background and experience to handle insurance for your type of business. Also look for customer testimonials. If you expect your business to continue growing, consider whether the company offers coverage that can grow with you. 

Coverage

Many companies sell general liability business insurance, but it can be challenging to determine the type of coverage you'll need. Consider the risks you face in your business. Different types of businesses have different types of risk. For instance, a medical practice would need more coverage than an arts and crafts supplier.

If you have a high-risk business, seek out insurers that offer excess insurance or umbrella policies to expand your coverage. These will cover you if a claim against you exceeds the amount of your general liability policy. These are a couple of the questions you should ask yourself and/or the insurance provider:

  • Can the insurer provide enough coverage for all of your assets' liabilities as well as damage?
  • Is the provider's liability insurance adequate for your business's risks?

If you are a contractor or perform projects for other companies, it's important to check with your client about insurance. A contract for which you perform work may require a certain amount of insurance coverage or an umbrella policy, or sometimes a company will add you to its general liability policy to be insured on a specific project. Some businesses are required by state law to carry certain types of liability insurance, so check your state's requirements. 

Claims Processing

You want an insurer with a proven record of settling claims quickly and fairly. Check an insurer's claims process to see if it offers several options, including online tools, to submit and track a claim. The more options for submitting a claim, the better. The insurer's track record for how quickly it processes claims is also important.

You also may want to make sure the insurance provider lets you file claims 24/7. Should something happen on the weekend or late at night, you don't want to have to wait to start the claims process.

Review testimonials from people who have been through that insurance company's claims process. The insurer should have a history of high customer satisfaction. Business liability insurance companies should be responsive and supportive should you ever need to file a claim.

Other Insurance Options

Even though you may be specifically looking for business liability insurance, you likely will need other policies for your business. Those may include other liability options, like professional or cyber liability insurance, or policies like property damage, commercial auto, or workers' compensation insurance.

Finding an insurance company that can offer you all of the business insurance policies you need will save you time and the hassle of working with multiple insurers.

Workers' Compensation Insurance

Another key piece of insurance that all employers need is workers' compensation. Workers' comp is a type of insurance that protects employers from potential lawsuits and provides injured employees with insurance payouts.

Depending on your industry or the number of employees you have, you may be required to have this type of insurance. It can be the difference between an insurance payout for an injured worker and an expensive lawsuit that could force your company into bankruptcy.

Workers' comp has additional built-in protections. It can often prevent a third party from suing you in the event of an employee injury. Let's say, for example, a worker is injured while using a heavy piece of machinery. If that worker sues the machinery company, workers' comp can protect you against the machinery company suing you. This is a basic example, and legal situations are often more complex. The key takeaway is that workers' comp can serve not only as a benefit to your employees should they be injured, but also as a safeguard for your business.

Each state has different legal structures for workers' comp. Some states require you to have it; others let you enroll at your own discretion. The cost structure also varies by state. Depending on your industry and state, you should expect to pay 1% to 4% of your total payroll for workers' comp insurance.

Despite laws in place around workers' comp, Insureon found that only 17% of small businesses surveyed said they were enrolled in it. If you don't have workers' comp or haven't even thought about it, you should consider it, both to benefit your employees and to protect your business.

What to Expect in 2020

While adoption at this point has been slower than in other industries, we expect artificial intelligence to continue making its way into the insurance industry. Incorporating this type of intelligence into their services could have huge dividends for insurance providers. 

McKinsey & Company estimates the insurance industry could see $1.1 trillion in additional value by using AI throughout its services. This includes marketing and sales, operations, risk, service operations, finance and IT, and human resources. 

There are multiple ways the insurance industry could incorporate AI. One way we foresee is providing businesses with different insurance options and quotes more quickly. 

Instead of customers speaking to a live agent, AI could manage those responsibilities. Chatbots could recommend the policies that make the most sense for businesses and give an instant quote for those services. Research from Accenture found that 80% of insurers expect that AI will work alongside humans in their organizations as a co-worker, collaborator and trusted advisor in 2020. 

According to the National Association of Insurance Commissioners, the amount of data insurance companies collect will fuel the incorporation of AI into their services. "The abundance [of] unstructured data can be leveraged through AI to increase customer engagement, create more personalized service and more meaningful marketing messages, sell the right product to customers, and target the right customer," wrote the NAIC on its website

Another area that may see more widespread adoption of AI is the processing of claims. AI within this specific area could gain more steam throughout the industry in 2020.

March 2020: As medical marijuana becomes legal in more states, businesses will want to pay attention to the role of insurance companies in covering such treatments under workers' compensation laws in 2020. 

In New Jersey, lawmakers recently advanced a bill that would require workers' compensation to cover the costs of medical marijuana treatments. The law states, however, that the injured patient must have tried at least one other type of treatment before moving on to marijuana. The potential new law follows a New Jersey appeals court ruling in January that determined an employer must pay the monthly medical marijuana bills of a former employer who was injured on the job nearly two decades ago. 

Similarly, the Maryland Workers' Compensation Commission recently ordered that out-of-pocket medical expenses for pain management should be reimbursed up to $200 per month. While the ruling didn't cite medical marijuana specifically, it noted that the reimbursements should cover all forms of treatment that are legally allowed in the state, which include cannabis. 

While these laws and rulings only impact workers in two states, it stands to reason that more states will follow suit as medical marijuana becomes more prevalent nationwide.

Business Liability Insurance FAQs

Q: What is commercial general liability insurance?

A: Commercial general liability insurance is another name for business liability insurance. It is a necessary policy for most businesses. It covers a wide range of potential issues, including injuries to people other than your employees who enter your store or workplace. It also covers damage that may occur to their property when they enter your store or office.

It also protects you against any lawsuits that might come your way should one of your ads cause harm to a competitor. This coverage includes any claims of libel or slander.

In all, this type of coverage is necessary for many businesses, as it provides protection and coverage against many possible issues.

Q: Who needs business liability insurance?

A: Nearly all businesses, regardless of industry, should have some level of business liability insurance. This can cover your business in a number of different scenarios, including if a customer is injured inside your store or office or if your products or service cause bodily harm to someone.

All businesses can benefit from that extra layer of protection to help cover defense fees or potential judgments. Like other types of insurance, general liability insurance is something you hope you never have to use. However, if you don't have it and do need it for some reason, you could put your business in serious jeopardy.  

Q: How much general liability insurance coverage do you need?

A: This depends a lot on the type of business you have. Insurance providers offer a range of coverage amounts. Coverage can range from $100,000 to as much as $2 million for one instance and $4 million for all instances. Many providers offer umbrella policies that can increase that amount to as much as $10 million.

You need to take a number of factors into account to determine how much coverage you need from your insurance policy. Your industry, location, revenue, number of daily visitors and type of workplace (e.g., a retail outlet, office or manufacturing plant) will help you determine the right level of coverage for your business.

Q: Do you need business insurance for an LLC?

A: While your personal assets may be protected if you own an LLC, you still need business insurance, especially general liability coverage. 

Even though a potential lawsuit against your business may spare your personal assets if you have an LLC business structure, you are still putting your business in serious risk if you don't have business insurance. An LLC faces much of the same dangers as businesses with other structures, so there is no reason not to protect it with the proper insurance policies.

Q: How much does general liability insurance cost?

A: Similarly to the amount of coverage you need, the cost of general liability insurance depends greatly on the type of business you have. Your company's risk exposure, size, building construction, requested coverage amount, geographical location and number of employees, among other things, all factor into the rate you'll pay for liability insurance.

Many insurance providers offer online quote options, meaning you can fill out some information about your business on their websites and receive quotes for your insurance instantly. This is an easy way to shop around for your insurance. When filling out these forms on some insurers' websites, we found prices ranging from about $450 to $700 per year for liability coverage of $1 million for a retail store.

Q: Do you really need business insurance?

A: The quick and easy answer to this question is yes. Besides the fact that it protects your business from various claims that may come your way, some types of insurance are required by law.

Specifically, if you are hiring employees, many states require you to have workers' compensation insurance. Besides that, it really comes down to choosing the insurance policies that are right for your business. At a minimum, it is recommended that all business carry some liability insurance as well as property insurance.

Methodology

To determine the best business liability and workers' compensation insurance companies, we started with a list of two dozen providers. We then visited each company's website and did some initial research.

Next, we focused on some of the bigger insurance companies and eliminated companies that are just insurance brokers, which work with businesses to find them the best coverage and rates for their needs.

We ultimately narrowed down our pool to AIG, Allstate, Chubb, CNA Financial, Farmers, Hiscox, Liberty Mutual, Nationwide, Progressive, State Farm, The Hartford and Travelers.

We then contacted each insurance provider, asking them to fill out a questionnaire designed to provide us with more details on each one's business liability and workers' compensation offerings. We asked about coverage types, coverage amounts, the claims process and what other types of insurance they offer.

Overall, we based our best picks on these factors:

  • Liability insurance options
  • Workers' compensation insurance
  • Other insurance options
  • How rates are determined
  • Coverage amounts
  • The claims process
  • Better Business Bureau ratings and complaints

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Business insurance, more than incorporation, protects you from liability losses associated with your company.  From Commercial Business Insurance to Insurance for Employees, there are different types of coverage to help limit losses in the event of a lawsuit.  Download our Business Insurance Checklist to help determine the type of coverage that could work best for you.

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Common Business Liability Insurance Questions & Answers

Have a business liability insurance question of your own?

Mr. Roth is correct. In addition, you should look at your local state law to see what law applies to products liability. Products liability law varies from state-to-state, with some state laws being more business-friendly than others. Also, you should check to see that the manufacturers of products you are interested in allow distribution by folks like yourself, or whether they have exclusive distribution agreements. I represented a Wellness Center that received a cease and desist letter...

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