It really doesn't matter what industry your business operates in. There are always people looking to turn a profit (at the expense of honest businesses). While you may think that your business doesn't require liability insurance, you're wrong. Imagine if a customer injured themselves using your product, or got hurt while on your property, or thought that your consulting services were negligent. Do you have the liquidity to fight these types of legal claims? 

This is why liability insurance is essential for the safeguarding of your business's success. Before we get into professional liability insurance details (coverage, cost, etc.), first let's delve into the main types of business liability insurance available on the market. 

Main Types of Business Insurance

There are several types of business insurance policies that are considered absolute musts pretty much across the board. Property, vehicle, liability, workers' compensation, and product liability are some of the main policy types. While not every single business will need all of the aforementioned policies, it's typical that they will need at least a few of them. You can view additional business policy types here. 

Commercial Property

Commercial property insurance protects your business's physical property (both outside and inside). This includes the building, as well as the contents within the building (e.g. computers, furniture, etc.). This type of policy is most similar to a homeowners policy. They don't typically protect against floods or earthquakes, so if you're in a location prone 

to these events you will need to purchase separate policies (or coverage add-ons).

Commercial Vehicle

Commercial auto policies protect your business's vehicles from costs related to damage either done by, or to them (i.e. accidents). This type of policy protects you from any liability should one of your business-owned vehicles be involved in an accident. 

General Liability 

General liability policies protect businesses from a wide range of liability issues. This type of policy is very common across nearly all industries. In many states, businesses are required to have a general liability policy to even legally operate within the state. 

Professional Liability Insurance

Also referred to as "errors and omissions" insurance, this type of policy is specifically designed to protect businesses that provide consultation services to other parties. However, this type of policy can be applied to numerous types of businesses across several industries. 

Professional liability policies will protect your company from lawsuits and other legal actions filed by former/current clients. For example: 

1. "Law practice A's" client decides that "law practice A's" advice/consultation was negligent, they might decide to file legal action against "law practice A." This is where a professional liability insurance policy comes into play. 

2. Electrician A doesn't install an electronic fixture properly, resulting in the injury of a customer. The customer decides to file a lawsuit against electrician A for negligence. 

This type of lawsuit is very, very common and one of the main reasons why a professional liability policy is recommended to most types of businesses. 

How Much Does Professional Liability Insurance Cost?

How much your professional liability policy will cost depends on which specific industry your business is a part of, as well as other factors including; business size, annual revenue, number of employees, etc.

You also have to factor in which specific coverages you want included in your policy. If you opt for a policy with numerous/additional coverages, that's going to cost more than a standard liability policy. The industry standard cost for a basic professional liability policy ranges from $600 to $1,100 (per year). 

The biggest factor in determining how much your policy will cost is the industry of your business. This should go without saying, but obviously the higher level of risk that your industry has, the higher your monthly premium is going to be. Anything involving physical labor has much higher levels of liability than say, a forensic accounting firm. 

Coverage Limits and Premiums 

If you're not satisfied with lower level policy offerings (or you're looking for one that has a higher payout level), you will need to purchase a policy with higher coverage limits. The higher the coverage limit on a policy though, the higher the premium. Claim limits vary from policy to policy, however most range from $200,000 up to $2,000,000. The average number across industries is typically around $1,000,000 in coverage (per year). 

Note: You can lower your premium costs by opting to pay all of your monthly premiums upfront at the beginning of your scheduled year. Companies usually provide upfront discounts if you choose to pay all of your premiums at once.