How much liability coverage should a small business carry?


Quick Answer

General liability coverage needs vary on a case-by-case basis based on the type of business and the location in which the business operates, as described by the U.S. Small Business Administration (SBA). This means that a small business that operates with only one or two employees who are seated inside an office building will likely require a much smaller amount of liability insurance than a business with four or five employees who perform potentially dangerous tasks outdoors, such as a roofing company. Agencies such as the SBA do not put an exact dollar figure on the amount of insurance required.

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Full Answer

Monthly premiums for small business general liability insurance policies tend to range from $750 to $2000, according to the SBA. Business owners who feel that they are unlikely to ever face a liability claim may want to stick to the lower end of this range, while those with more hazardous businesses may want to seek a higher-premium policy.

General liability insurance helps cover legal expenses and penalties that a business can incur as the result of injuries that happen on the business premises or are caused by business employees. These policies provide coverage up to a certain dollar amount, lessening the financial damage an incident can do to the business.

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