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What Is Business Liability?
Business liability insurance protects your small business if you’re sued for bodily injury, property damage or other type of loss during normal business operations. This type of seguro de negocio is also known as general liability insurance or commercial general liability insurance. Business liability claims can be very costly for small business owners. Without proper coverage, the out-of-pocket defense costs for injuries or damages can be high.
Business liability is also a term for any amount owed by a small business owner that eventually will need to be paid. Unless you run a cash-only business, you likely have creditors, employees and state taxes to pay. All of these are considered a business liability.
What Does Business Liability Insurance Protect?
Business liability insurance covers your small business’ assets and reputation from costly lawsuits and claims. The risks to your business will vary based on your industry, but can include:
- Medical expenses for bodily injury or illness caused by your business
- Property damage caused by your employees in a customer’s home or damage to your own rented property due to a fire
- Reputational damage if you’re sued for libel or slander
Types of Business Liabilities
There are two main types of business liabilities: current and non-current. Current business liabilities, also known as short-term liabilities, are generally expected to be paid off within a year. These can include:
- Payroll taxes withheld from employee paychecks
- Sales taxes collected from customer payments
- Mortgage or loan payments due within the year
- Unearned income that your business collects before delivering goods or services
Non-current business liabilities, also known as long-term liabilities, are expenses that take more than a year to pay off, such as:
- Mortgage, leases or loan payments due after a year
- Bond payments with a maturity date that extends beyond a year
Common Questions About Business Liability
Is Business Liability the Same as General Liability?
Business liability insurance is simply another term for general liability insurance. Most insurance companies offer a general liability insurance policy that offers comprehensive coverage for both property and liability claims.
Many business owners increase their protection by bundling coverage through a Business Owner’s Policy (BOP). A BOP combines three insurance coverages into one convenient policy:
When Do Businesses Need Liability Insurance?
Each state has specific requirements for when business owners need business liability insurance. Most likely, you’ll need coverage to:
- Get a license to sell liquor or real estate
- Practice medicine or dentistry
- Provide accounting services
- Comply with state laws requiring workers’ compensation or commercial auto insurance
- Fulfill contracts with other companies you’re doing business with
- Sign leases for commercial property
How Much Does Business Liability Insurance Cost?
On average, general liability insurance costs $805 annually or about $67 a month for coverage with The Hartford.1 Your business liability insurance costs may vary because every business has unique risks. Your insurance agency will take several factors into consideration to figure out your cost, including:
- Policy deductible amount
- Coverage details
- Type of business
- Years of experience
- Lugar
- Claims history
- Number of employees
Key Takeaways: Business Liability Insurance
Small businesses often need to borrow funds, especially to get their feet off the ground. These debts are types of business liabilities. When you protect your business from costly claims with business liability insurance, you’re helping ensure that you’ll be able to continue paying your expenses so you can operate as normal. We have over 200 years of experience helping small business owners keep their doors open. Get an insurance quote today and learn more about our small business solutions for your company’s unique needs.
Last Updated: November 14, 2023
1 Premium amounts presented are based on monthly premium paid by The Hartford's Small Business customers between 1/1/22 and 9/14/23 for 12-month policies. Premium is derived from a number of factors specific to your business and may vary.
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