If you're starting a business or trying to get your insurance costs under control, you've probably wondered: how much does general liability insurance actually cost? The short answer is that most small businesses pay somewhere between $500 and $1,500 per year. But here's the thing—that range is huge, and where you land depends on factors you might not expect.
General liability insurance protects your business if someone gets hurt on your property, if you accidentally damage a client's stuff, or if someone claims your advertising injured their reputation. It's the foundational coverage most businesses need, and in some cases, your clients or landlord won't even work with you without it. Let's break down what you'll actually pay and why.
What's the Average Cost?
According to 2024-2025 data from major insurers, the typical small business pays between $42 and $104 per month for general liability insurance. That works out to roughly $500 to $1,250 annually, with the national average landing around $1,000 per year. Progressive reports that their new customers paid a median of $60 per month in 2024, while The Hartford's average sits at $68 monthly.
But averages only tell you so much. A freelance graphic designer working from home might pay $300 per year, while a small landscaping company with five employees could easily pay $2,500 or more. The difference comes down to risk, and insurance companies are really good at calculating it.
Why Industry Matters Most
Here's what surprises most business owners: your industry classification has a bigger impact on your premium than almost anything else. Insurance companies use industry codes to set your base rate, and the difference between high-risk and low-risk industries is staggering. Construction companies pay nearly 12 times more than consulting firms because injuries and property damage happen frequently on job sites.
Think about it from the insurer's perspective. A pressure washing business deals with slip hazards, water damage risks, and working on other people's property—they might pay $900 or more monthly. Meanwhile, a drone operator working remotely might pay just $17 per month because they rarely interact with customers directly and their equipment doesn't pose the same risks.
Industries that typically pay more include construction, cleaning services, landscaping, restaurants, and retail stores with physical locations. Lower-cost industries include IT consultants, photographers, writers, virtual assistants, and other home-based businesses with minimal customer interaction.
How Revenue and Business Size Affect Your Rate
The more money your business makes, the more you'll pay for general liability insurance. This isn't arbitrary—higher revenue usually means more customers, more transactions, and more opportunities for something to go wrong. A consulting firm making $50,000 per year will pay significantly less than one pulling in $500,000, even if they're in the same industry.
The same goes for the number of employees. More employees means more hands touching client projects, more people interacting with customers, and statistically, more chances for accidents. Insurance companies price this in because their data shows that larger businesses file more claims. If you're a solopreneur, you'll pay less than a business with ten employees doing the same work.
The Impact of Claims History
Your track record matters. If you've gone three years without filing a claim, you could earn experience discounts of 10-20%, which adds up to real savings. Insurance companies reward businesses that don't cost them money, and a clean history shows you're managing risk well.
On the flip side, filing a claim can increase your premiums by 25-50% for the next three to five years. That doesn't mean you shouldn't file legitimate claims—that's what insurance is for. But it does mean you should think carefully about filing small claims that you could reasonably handle out of pocket. Sometimes paying a $1,500 repair bill yourself is smarter than filing a claim and watching your premium jump $500 per year for five years.
Coverage Limits and Deductibles
Most general liability policies come with standard limits of $1 million per occurrence and $2 million aggregate (total for the policy period). This is often called a 1/2 policy, and it's what most small businesses choose. If you need higher limits—say $2 million per occurrence—you'll pay more because the insurance company's potential payout is bigger.
Your deductible works in reverse. A higher deductible means you're taking on more risk yourself, so the insurance company charges you less. Choosing a $2,500 deductible instead of $500 could save you 10-20% on your premium. Just make sure you actually have that deductible amount available if you need to file a claim.
Location Makes a Bigger Difference Than You Think
Where you do business affects your rate by as much as 34%. Some states have more lawsuits, higher court awards, and more expensive medical care, which means insurers pay out more in claims. California, New York, and Florida typically have higher premiums than states like Idaho or Wyoming. If you operate in multiple states, your insurer will factor in all the locations where you're doing business.
How to Get the Best Rate
Shopping around is non-negotiable. Premiums for identical coverage can vary by hundreds of dollars between insurers because each company weighs risk factors differently. Get quotes from at least three carriers, and don't just compare the bottom line—look at coverage limits, exclusions, and deductibles.
Ask about discounts. Many insurers offer lower rates if you bundle general liability with other policies like commercial property or professional liability insurance. Paying annually instead of monthly often saves 5-10%, and some companies give discounts for safety training programs or industry certifications.
Be honest about your business operations. Fudging details to get a lower rate can backfire spectacularly if you file a claim and the insurer discovers the discrepancy. They could deny your claim entirely, leaving you on the hook for tens of thousands in legal fees or damages. It's not worth the risk.
What Happens If You Skip It?
Some business owners look at that $500-1,500 annual premium and think they can skip general liability insurance, especially in the early days. But one lawsuit could destroy everything you've built. A customer trips over a cable at your office and breaks their ankle? You could be looking at $50,000 in medical bills and lost wages. A contractor accidentally damages a client's $100,000 piece of equipment? That's coming out of your business—and potentially your personal assets.
Beyond the financial risk, many clients and commercial landlords require proof of insurance before they'll sign a contract or lease. Without it, you're cutting yourself off from opportunities. When you think about it that way, spending $1,000 per year to protect your business and keep doors open isn't expensive—it's essential.
The bottom line? General liability insurance costs most small businesses between $500 and $1,500 per year, with your specific rate depending heavily on your industry, revenue, claims history, and location. It's one of those business expenses that feels optional until you need it—and then it's priceless. Get quotes, compare coverage, and make sure you're protected before something goes wrong.
