All You Need to Know About Cheap Liability Insurance

TLTR: This blog explores cheap liability insurance, its essential workings, the coverages it includes, and its costs. 

In this blog

What is Liability Insurance?

Liability insurance is coverage that protects against claims arising from injuries and damage to people or property. It’s the most basic policy you can purchase when it comes to covering for liabilities.  

There are two types of liability policies: bodily injury liability (BI) and property liability (PL). BI covers damages when someone gets hurt as the result of an accident. Whereas, PL protects against harm to your possessions in case you accidentally break something.

Liability coverage is a vital part of any business’s financial safety net. It protects from lawsuits resulting from accidents that occur due to negligence. Especially if existing general commercial insurance policies don’t cover them. Liability Insurance also offers some relief if your employee incurs injuries  during a work-related activity. But workers compensation doesn’t cover them completely. However, liability insurance will cover hospital bills following an assault at work.

How Does Liability Insurance Work?

Liability insurance is vital for individuals held liable for injuries sustained by other people or damages to another party’s property due to their actions. In this context, liability insurance is also called third-party insurance.

This policy is primarily for those who own a home, vehicle, or business. If you’re in a position to be held liable and sued for damages or injuries, this is the policy to have as a financial safety net. It protects the insured and the involved parties who sustain injuries due to the negligence of the policyholder.

Liability insurance is mandatory in most states. Especially for people who own a vehicle, the insurance can cover the injury to the people and damages to the vehicle in the event of an accident. According to the Department of State, all motor vehicles owned and operated within U.S. soil require proof of insurance on a semi-annual or annual renewal basis. Furthermore, the minimum required limits to a liability coverage are either:

    • A single combined limit of $300,000
    • Split limit of $100,000, $300,000, and $100,000 per person, per injury, and property damage, respectively.

Note: Despite its coverage, liability insurance doesn’t cover criminal acts or intentional damages to anyone.

Coverages That Include Cheap
Liability Insurance

As an individual or a business owner, you face a wide range of liabilities. These can put your assets in danger when it comes to the subject of claims. So, proper coverage to protect your assets is required, provided by select types of coverage. These are:

General liability insurance

This coverage is a must for any business that has employees. It includes bodily injury, property damage, and in some cases, advertising damages as well. General liability insurance covers general damage compensation but not punitive ones if the case goes to court because you don’t want your competitors to get their hands on this information.

Workers compensation insurance

This is a mandatory policy for employers. It helps protect them from liabilities due to employee injury and death. Workers compensation insurance also covers the loss of pay for the employee due to a severe injury that leaves them unable to work.

Product liability insurance

A company that produces products for sale on the general market might consider getting product liability insurance. This covers lawsuits arising from injury or death caused by their products. And it protects them against financial harm resulting from mistakes made in the production of the goods they sell on a large-scale basis.

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Directors and officers Insurance

When it comes to running a company, many things that can go wrong. The higher-ups need the security of directors and officers liability insurance. They may be held liable for decisions made on behalf of the corporation if said decision causes harm or injury. A company’s board members should take this seriously because sometimes their assets will also be at risk.

Umbrella liability insurance

An umbrella insurance policy is a perfect way to cover your back. This personal coverage policy kicks in when every other form of insurance is exhausted, making these an excellent catch-all for any significant losses that may come up, and many people have signed on because they understand this.

Commercial liability insurance

This policy covers the company by giving it protection if anyone they may injure, their employees or not. It also covers any property damage that occurs while an employee does something negligent. It offers coverage should a suit be filed from an employee who believes themselves injured due to negligence. These cases can typically base off of discrimination (such as sexual harassment) or wrongful termination suits where you have wrongfully terminated them without being given a proper reason for dismissal first.

Errors and omissions liability insurance

This policy covers lawsuits that arise due to negligence or failure in performing one’s professional duties. Professionals such as doctors, accountants, lawyers, engineers, architects, or any business establishment providing certain services for a fee should consider this coverage. Errors and omissions liability insurance will cover court charges, attorney fees, and any settlements to a certain amount specified in the insurance contract.

Note: Do keep in mind that E&O coverage will not cover bodily injuries, fraudulent or dishonest acts, alongside criminal prosecution.

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When Should You Consider
Cheap Liability Insurance?

It would be best to consider getting cheap liability insurance when you spend most of your time at your business doing work for others. This is because the insurance repays the damages that result from accidents in which you are liable. You should, therefore, consider getting cheap liability insurance if one or more workers may be on site when you are not around and if there may be people visiting the place to do some work for them.

It is very easy to get cheap liability insurance if all of the above apply to your business. Also, it can be obtained either online or via a broker who works with multiple clients insuring different types of companies to ensure that you get the best deal.

Some companies may offer discounts to individuals who have other policies with them. So, all you need to do is utilize this chance as it could save you a significant amount of money. Additionally, you could also receive a discount for being a first-time policyholder.

How Much Does Cheap Liability Insurance Cost?

The cost of cheap liability insurance primarily depends on the company that you choose to insure your business with. Different companies have different ways of calculating their prices, but for the most part, they consider factors such as:

    • Location of your business
    • The industry your business belongs to
    • The type of work you do
    • Your choice of coverage option

Regarding liability insurance for business, its cost depends on the type of business, operations, and relevant business risks. As per Insureon, a general liability policy costs around $42 per month or about $500 annually. Furthermore, 48% of small businesses pay around $300 to $600 annually for their insurance policies.

Also, the cost for cheap liability insurance for cars can vary depending on age, driving record, amount of time with the company, and credit score. For example, if somebody was 17 years old, they might be charged more than a 40-year-old for cheap liability insurance. Why? Because an insurer would expect a higher risk factor due to their inexperience behind the wheel.

According to Nerd Wallet, the cheapest liability-only car insurance costs around $380 to $759 annually. These rates relate to the minimum car insurance coverage as required in your state. It only provides coverage for property damage and medical bills for individuals involved in accidents you cause.

Best Carriers For Cheap Liability Insurance?

Finding cheap and reliable liability insurers can be a challenge. Let’s have a look at a few best companies for liability insurance:

State Farm

They provide reliable and competitive liability insurance with discounts for small businesses. Their general liability insurance goes along with a business owner’s policy, and they offer a personalized service to their clients. However, they do not provide online quotes or customer service.

The Hartford

The Hartford provides excellent choices for professional offices with high liability limits. Their liability insurance is suitable for accountants, attorneys, and financial advisors. They aim to provide broad coverage specific to the industry; therefore, the liability insurance they provide is only available as part of a BOP.

Chubb

Chubb offers great standalone liability policies catering to retailers and low annual prices. While their general liability insurance is good on its own, their BOP does provide additional benefits to cover your property or any sudden losses, but with a low limit.

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In Conclusion

Good liability insurance will most definitely help you and your business in times of peril. But it is always best to know your situation, needs, and financial standing before committing to one. Once you have all this information, it is easy to get cheap liability insurance, and all you need to do is read the fine print to understand what you are getting for your money. Of course, you can always seek the assistance of a well-experienced insurance agent to help you understand the coverages that you need.

Did you find our blog helpful? If yes, then please let us know in the comments below.

If you are looking for information regarding agents that are experts in cheap liability insurance, then do visit our agent directory.

FAQs

By now, it seems evident that gap insurance is necessary. Here are some frequently asked questions about gap insurance:   

Is cheap liability insurance a better alternative than full coverage car insurance?

Generally speaking, liability insurance is part of a full coverage car insurance. However, having liability-only insurance is also a valid option for people looking for a cheaper alternative.

Since full coverage insurance generally includes liability insurance, collision, comprehensive, uninsured/underinsured motorist protection, getting just the liability insurance for your car can bring down your average coverage costs.

Note: Liability insurance is more affordable than cheap full coverage insuranceBut it comes with risks since you will be missing necessary coverage such as your medical bills and repair costs of your vehicle.

How To Save Money on Cheap Liability Insurance?

Saving money on cheap liability insurance can be tricky. But you can follow these steps to save money on your liability insurance.

Bundle your policies: You can receive discounts and lower rates when you purchase multiple policies from the same insurer. Getting a bundled policy such as a business owners policy can be beneficial since it includes general liability and commercial property insurance at a lower rate.

Assess and manage your risks: You will likely have a clean claims history if you are aware of risks and manage them accordingly. This will make you look better in front of insurers as you will present yourself as someone reliable and low risk to insure.

Pay upfront: Insurers will usually ask you to pay your general liability premium monthly or annual installments. While going for a smaller monthly amount does seem attractive, paying the total amount from the beginning might have its benefits. When you pay the entire cost upfront, insurers will give you a lower rate and help you save money.

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