Last Updated: June 10, 2022

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 cost.

In this blog

What is Liability Insurance?

Liability insurance is a vital part of any business’s financial safety net. It provides coverage that protects you 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 liabilities.  

There are two types of liability policies: bodily injury liability (BI) and property liability (PL). BI covers claims that you or your business caused someone to be injured. PL protects against claims that you or your business caused property damage to someone else or their belongings.  

Liability Insurance also offers some relief if one of your employees is injured during work-related activity.  

How Does Liability Insurance Work?

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 alleged negligence of the policyholder. 

Also, liability insurance is mandatory for car owners in most states. It can cover injuries and damage to the people and vehicles involved in an accident.  

Note: Liability insurance doesn’t cover criminal acts or intentional damage.

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 serious danger. There are several different types of insurance that can provide you with the protection you need, depending on your circumstances. These include: 

General Liability Insurance

This 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 damage if the case goes to court.

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 employees due to severe injuries that leave 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 allegedly 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. 

Directors and Officers Insurance

Running a company is a complicated endeavor, and many things can go wrong. The higherups may be held liable for decisions made on behalf of the corporation if these decisions are alleged to cause harm or injury. That’s where directors and officers liability insurance comes in. A company’s board members should take this seriously because sometimes their personal 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 it an excellent catch-all for any significant losses that may come up.

Commercial Liability Insurance

This policy covers a company by giving it financial protection for anyone they may be alleged to injure, whether they are employees or not. It covers any property damage that may occur due to an employee’s negligence. It also offers coverage should a lawsuit be filed by an employee who claims to have suffered physical or emotional injury due to negligence. These cases can involve accusations of discrimination or sexual harassment. Also common are wrongful termination suits, in which the employee clams to have been terminated without being given a proper reason for dismissal.

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. E and O insurance will cover court expenses, attorney fees, and any settlements up to the amount specified in the insurance contract.  

Note: Keep in mind that E&O coverage will not cover bodily injuries or fraudulent or dishonest acts.

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When Should You Consider
Cheap Liability Insurance?

It’s a good idea 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 also consider getting cheap liability insurance if one or more workers may be on site when you’re not around and if there may be customers involved. 

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 an agent who works with multiple insurance companies to make sure that you get the best deal. 

Some companies offer discounts to individuals who have other policies with them. Be sure to check and see if this might apply in your case. You may also be eligible for a discount for being a first-time policyholder. 

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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. 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. About 48% of small businesses pay around $300 to $600 annually for their insurance policies.  

Where cars are concerned, the cost for cheap liability insurance can vary depending on age, driving record, and credit score. For example, an 18-year-old 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 the younger person’s inexperience behind the wheel. 

According to Nerd Wallet, the cheapest liability-only car insurance costs around $380 to $759 annually. These rates depend on the minimum car insurance coverage required in each state. The policy 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, and 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 protect you and your business in times of peril. But it’s always best to know your situation, needs, and financial standing before committing to a policy. Once you’ve got a handle on all of that, it’s easy to get cheap liability insurance. All you need to do is read the fine print to understand what you’re getting for your money. Of course, you can always seek the assistance of an experienced insurance agent to help you understand the coverage 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

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

Generally speaking, liability insurance is part of 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, and 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 premiums in monthly or annual installments. While going for a smaller monthly amount may seem attractive, when you pay the entire cost upfront, insurers will give you a lower rate. 

How Cheap is Liability Insurance Compared to Full Coverage Car Insurance?

As stated by Wallet Hub, liability insurance is approximately 64% cheaper compared to full coverage insurance. On average, you would be paying $720 annually on your liability coverage in contrast to $1,997 for full coverage. Keep in mind that these amounts are not uniform across all states and can differ accordingly. Make sure that you consult with your agent or insurance provider for more accurate and relevant rates based on your location. 

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