Cost of Commercial Liability Insurance in Texas

In Texas, the cost of business liability insurance is not fixed as it varies by the insurance company. In most cases, your insurance company determines the cost of the business liability insurance coverage they provide. The cost of business liability insurance is also dependent on certain factors such as:

• The industry your business is in

• The location of your business

• The number of risks the business faces

• The extent of the insurance coverage you choose to purchase

Although the monthly cost of business liability insurance in Texas differs, the premium ranges for different types of business liability insurance include:

General Liability insurance:

This package-style insurance covers businesses from losses arising from liability claims for property damage or bodily injury. It can include a select group of needed coverages, or cover multiple facets of the business operations. The cost of general liability insurance coverage premium in Texas depends on the level of risk exposure and the size of the business. General liability policies for most home-run Texas small businesses cost less than $100 per month, while the businesses with more employees average $250 - $1,000 per month per $1 million of coverage.

Professional liability insurance:

A professional liability insurance premium is affected by the type of services you offer, how much you can affect others with what you do, and the amount of experience you have doing what you do. For example, an insurer may consider a brain surgeon a higher risk to insure than a nurse. At the same time, the brain surgeon with more experience and more time without claims, compared to a newly certified colleague, is also likely to get less expensive coverage. Professional liability insurance for a rock climbing instructor and a CPA who stores client’s data on the servers, may have the same amount of coverage but the costs will differ.

The following are the most common types of professional liability insurance in Texas and their monthly premium cost:

1. Errors and Omissions insurance - $40 - $80 per month with a coverage limit of $1 million per occurrence

2. Malpractice insurance - $320 - $4,500 per month with a coverage limit of $1,000,000 per occurrence

3. Cyber liability insurance - $130 - $4000 per month with a coverage limit of $1 million per occurrence

Product liability insurance:

The cost of product liability insurance usually depends on the kind of product being made or sold by a business owner. For example, manufacturing medicine poses a higher risk than manufacturing office materials. The cost of product liability insurance for $1 million of coverage (per occurrence) is usually between $70 to $250 per month (per $1,000,000 in sales).

Speak with a Texas-licensed knowledgeable commercial insurance agent for more information regarding how much business liability insurance may cost for your Texas business. Every new business should be assessed by a qualified professional.

How Much Should I Pay for Commercial Liability Insurance Insurance in Texas?

The amount of money a business would have to pay for commercial liability insurance depends on the industry the business is in, the location of the business, the number of risks the business faces, and how much coverage the individual needs. For instance, the more risks your business faces, the more coverage you would need. This, in turn, makes the insurance policy you want to purchase cost more. So, if a policyholder operates a small business in a low-risk industry, they would have to pay for less coverage than another policyholder who owns a big business in a high-risk industry.

You can consult a state-licensed insurance agent for more information on the cost of business liability insurance in Texas.

How to Understand the Cost of Commercial Liability Insurance?

The cost of a policyholder’s business liability insurance in Texas depends on factors that determine whether a policyholder would pay more or less in business liability insurance. Understanding how these factors affect the cost of an insurance policy will help policyholders choose an insurance coverage best suited to them. Below is a list of factors that influence the cost of a policyholder’s business liability insurance:

• The size and condition of the business premises:

Business liability insurance protects you against personal liability risks of bodily injury or property damage. The larger a policyholder’s business premises is, the higher the risk of a third party sustaining a personal injury. If an insured business’ premises are in bad condition, there is a higher risk of accidents leading to a personal injury occurring. Essentially, these factors could increase your premiums.

• The class code and payroll of the insured business:

Usually, insurance agents use class codes to classify small businesses according to their general risks. In these codes, small businesses are grouped with other businesses that conduct similar work and face similar risks. They also allow insurers to examine claims within comparable fields and locations to ascertain the level and how much they cost in each group. To ascertain their insurance needs, a policyholder’s class code will be put side-by-side with other factors, such as their payroll or size and location of their business.

• The type of business the insured operates:

It is important to know that not all businesses are exposed to the same risks; some businesses are more risk-prone than others. The number of hazards a business may face is directly affected by the business's industry. For instance, construction jobs are generally riskier than desk jobs. The higher the number of risks a business may face, the higher the cost of the needed business liability insurance.

• The insured’s experience in their profession:

The policyholder’s level of experience in their profession indicates whether they would know how to avoid common risks. Typically, if the policyholder has many years of experience in their profession, they may have learned risk management in their profession. Hence, their business liability insurance cost may be lower than that of a beginner in the industry.

• The number of employees:

The more employees an insured business has, the more likely it is for personal injury inflicted by said employees to be sustained by a third party. For example, an employee is shelving hardware items, and in the process, some of the items fall on a customer standing close by, and they sustain serious injuries. The customer can sue your business for any personal injury sustained.

• The location of your business:

The location of your business will also affect the cost of your business liability insurance. For instance, if your business is located in an area with a high crime rate, you would most likely pay more business liability insurance premiums.

Note that aside from premiums, other payments affect the overall cost of a business liability insurance, such as a deductible. A deductible is the sum of money the business must pay out of pocket to cover a portion of an insured loss. Through deductibles, the risk is shared between the insured business and the insurer, while the recipient of the claim receives the full amount for which they qualify. For example, if you decide to pay $500 in deductible and there is a liability claim against the business for $50,000, the insured business pays the first $500 of the claim out of pocket, while the insurer covers the remaining $49,500.

For better understanding and more clarification on what affects the cost of your business liability insurance, consult a Texas-licensed commercial insurance expert.

What is the Average Cost of Commercial Liability Insurance in Texas?

The amount a business chooses to pay in deductibles also affects how much they would pay in premium rates. The higher the deductible, the lower their premium payment. However, having high deductibles is not the best idea because, in the event of covered damage, the insured will have to pay most or all of the amount needed to cover the damage. For example, suppose a General Liability insurance coverage policy has a $10,000 deductible, and the business has a liability claim against it for $15,000. When the claim is approved, the insured business pays $10,000, while the insurer pays $5,000. In most cases, the insured business sends the deductible payment to the insurer. The insurer adds it to their payout and sends the total to the injured party.

Only a commercial insurance professional licensed in Texas can provide an actual quote based on the assessment of the underlying business needs. Speak with a knowledgeable agent with access to multiple insurers for comparison

How Much is Typical Business Liability Insurance?

The cost of business liability insurance in Texas is influenced by varying factors such as the location of your business, the industry your business operates, the size of your premises, and other related factors. Typically, your business liability insurance cost also depends on the type and amount of risks and liabilities you want your policy to cover. Below is a list of common business liability insurance types and how much they typically cost per year, depending on the underlying risks:

Note: As the cyber and ransomware attacks on businesses in the U.S. are increasing, the cyber liability insurance industry is undergoing constant change. In 2022, the foreign state-sponsored cyber-attacks further elevated the uncertainty of the cost for cyber liability coverage. Similar changes are currently affecting Ransomware coverages too.

To get the best price for commercial liability coverage, speak with a knowledgeable commercial insurance agent who is licensed in Texas and has access to multiple insurers and options to compare. An experienced agent can assess your business needs and provide multiple coverage options.

How Much is Business Liability Insurance Per Month?

An annual premium for commercial insurance is always a less expensive option. If the business chooses to pay for business liability coverage monthly, it must finance the premium through a 3rd party finance company. The financier pays the policy in full, while the business pays back the loan with interest. The cost of a business liability monthly insurance premium in Texas is determined by:

• The annual cost of coverage - based on the business needs,

• Premium finance rate that the insured business qualifies for based on its credit and insurance claims history. The average annual rate depends on the current market conditions, the age, and risk of the business. Premium finance of commercial insurance in Texas commonly costs 7.5% - 12%,

• Amount of the down payment given to the financing company. The average is 15%- 20% of the total annual cost,

• Number of monthly payments to pay off the loan. The most common repayment period for commercial insurance premium finance is ten months, where the first payment is due on the first monthly anniversary of the coverage.

Below is an example of monthly premiums for commercial liability insurance when a business uses premium finance instead of paying the annual price in full.

How Much Does a Business Liability Insurance Policy Cost?

The cost of a business liability insurance policy depends on the number of liability risks the business needs to cover. The insurance policy will most likely cost more if the business has a wide range of liability risks that need coverage.

A general liability policy, which covers property damage (PD) and bodily injury (BI), starts from around $30 per month for a very small business with low coverage needs and goes up from there, in the range of $2,000 - $8,000 per year (per every $1 million of coverage / per claim). The cost greatly fluctuates based on the business specifics. A pet supply store and a popular nightclub may generate the same amount of sales, but their risks are inherently different, and so is the cost of insurance.

If the actions of the business and its employees can negatively affect others beyond bodily injury and property damage, the business may need to add on or get stand-alone professional liability coverage. For example, a financial advisor giving advice to clients about retirement investments may need additional professional liability insurance coverage to protect them (and their clients) in case their advice causes someone to lose money. The cost for Errors and Omissions (E&O), Professional Liability, and Malpractice coverages in Texas varies based on the profession and the risk exposure. For example:

• The E&O coverage is usually purchased per employee, commonly in the range of $450 - $1,000 / per year / per $1 million of coverage / per claim. A solo-preneurial consultant can expect to pay $1,000 to $4,000 per year, based on the industry and the type of consulting work provided.

• Medical malpractice insurance costs are the highest for surgeons, commonly ranging from $15,000 to $50,000 per year / per $1 million of coverage / per claim. Meanwhile, medical professionals with lower risk factors could pay $100 - $500 per month for the same amount of coverage.

If your business has multiple insurance needs, check with a knowledgeable commercial insurance agent who can evaluate how these needs can be bundled to save the business money.

Does Commercial Liability Insurance Have High Deductibles?

No. Commercial liability deductibles in Texas are usually kept low. The most common General Liability insurance deductible in Texas is $1,000. Meanwhile, employee practices liability deductible among Texas employers is usually closer to $5,000. Conversely, in the case of professional liability insurance, the insured business can choose whatever deductible they want based on the level and frequency of exposure to the covered risks. The most frequent professional liability deductible range in Texas is $1,000 to $20,000, while higher amounts are also commonly available.

A deductible is the amount of money the business must pay out of pocket before the insurer begins to pay. For instance, a coffee shop visitor spills coffee on themself, gets burned, and must seek medical treatment. The medical bill comes up to $4,000, and now the coffee shop is being asked to pay for this cost. If the coffee shop has a $500 general liability insurance deductible, the insurer pays $3,500, while the business pays its promised share – $500. General business liability deductibles are usually kept low.

To learn more about how your business liability insurance deductible works in Texas, contact a knowledgeable state-licensed commercial insurance agent.

Why is Commercial Liability Insurance so Expensive?

Liability insurance for businesses is generally not expensive, especially for small business owners. However, the cost of your business liability insurance depends on factors like the industry in which your business operates, the size of your business premises, the number of employees you have, etc. A commercial liability policy can cost more if the insured business operates in a high-risk industry, such as construction, oil and gas, or the medical field. Hence, while all businesses need liability coverage, riskier businesses always pay more for the same amount of coverage compared to more risk-averse operations.

If you believe that your business liability insurance policy costs more than it should, discuss this with a licensed Texas commercial insurance professional. A knowledgeable insurance agent can help you review the existing policy and evaluate the current insurance market for alternative and possibly more affordable solutions.

Why is my Business Liability Insurance so High?

Your business liability insurance may be high because of the many risks your business is exposed to. If the insured business is exposed to more risks than usual, the insuring commercial liability insurance policy will likely cost more than the average premium price. When shopping for a lower price, always make sure to compare equal coverages.

Examples of business risks that may affect the cost of your business liability insurance in Texas are:

• Safety and Security. Increasing safety standards across the company can help lower the cost of coverage.

• Employees and Training. Properly trained workforce results in more consistent and inherently less risk-prone work, which can bring the cost of liability coverage down.

• External Threats. In the digital age of storing data online, every business must critically assess how much risk of exposure to cyber threats it can take, especially if the business stores personal data and/or logs of identifiable transactions.

In order to always pay the best possible price, make sure to re-evaluate your business insurance needs annually with the help of an experienced state-licensed commercial insurance agent.

Another thing that could be making your business liability insurance high is paying for coverage you do not need. For example, there is no need for a business to purchase product liability insurance when they only offer services to clients and do not produce, recommend, or sell products. It is important to assess the kind of risks the business will realistically be exposed to before purchasing business liability insurance.

Also, having more than a handful of employees, large business premises, many customers, and the likes indicate a high degree of business activity. The more the business activity, the more risks your business will be exposed to. For example, a delivery business that owns many vehicles and warehouses in different cities would most likely have to spend more on business liability insurance coverage. This is due to the many risks it is exposed to compared to a smaller business, like an online reseller, who uses her home garage to store, package, and ship the products.

Always discuss your business insurance needs with licensed insurance professionals knowledgeable in your type of coverage.

What Raises and Lowers your Commercial Liability Insurance?

The following factors raise the cost of your business liability insurance in Texas:

• The condition of your business premises: If your business premises are not in good condition and could cause harm to customers, the cost of your business liability insurance would most likely go up. This is because your insurer views insuring your business as a big risk.

• Choosing a lower deductible: How much you decide to spend on your business liability insurance deductible directly affects the cost of your insurance premium. If you decide to pay a lower deductible, your insurance premium will cost more since you share less risk with your insurance company.

• A comprehensive coverage: The more risks you have covered, the higher your business liability insurance cost. Ensure to always watch out for overlap or duplication of benefits in your insurance policies to avoid overpaying for your business liability insurance.

The following factors will lower the cost of your business liability insurance policy:

• Being claim free: Having an insurance record with no claims can lower the cost of your insurance policy. This happens because the insurer considers your business as less of a risk.

• Removing excessive coverage: Cutting unnecessary coverage from your business liability insurance policy should lower the cost of the policy.

• Having a packaged deal: Purchasing multiple business liability insurance policies under a Business Owner Policy (BOP) could lower the cost of your insurance policy.

• Raising your deductible: Increasing the amount you pay in deductibles will most likely reduce the cost of your insurance premium. However, increasing the cost of your deductible may adversely affect the business in the long run because it may have to pay for all or most of the costs incurred if the insured risk occurs.

Consult a knowledgeable licensed commercial insurance agent to determine what increases and reduces the cost of your particular business liability insurance policy.

Does Commercial Liability Insurance Go Up after a Claim?

Yes. When an insured business files a liability claim, the insurer is likely to increase the cost of coverage during the next policy renewal. If the claim payout was extensive enough, commercial insurers may also deny coverage renewal if the business is determined too risky to insure after analyzing the latest claims.

However, it is not every kind of claim that may increase the cost of your insurance policy. For instance, small claims or a claim for a loss that was not primarily your fault may not lead to an increase in the cost of your insurance policy.

How Much Will a Claim Increase Business Liability Insurance?

Filing a commercial liability claim in Texas may increase the cost of commercial liability insurance premium by 20% to 40%. This increase occurs because the insurer has deemed insuring the policyholder and their business high-risk.

Which Business Liability Insurance Plan is Cheapest?

There are various types of commercial liability insurance coverage plans Texas businesses can choose from. Still, their coverage is usually strictly defined by the underlying business needs, based on the type of business and the risks it is exposed to. General Liability is considered the cheapest business liability insurance based on the amount of coverage it provides. It is the most all-encompassing commercial liability insurance. The typical annual cost for $1 million of GL coverage in Texas is $3,000 - $8,000, based on the specifics of the business.

If the business does not need all the coverage of the General Liability policy, it can get a cheaper solution by picking the specific coverages a-la-carte, based on the most important risks. The cheapest liability coverage in Texas costs around $500 per year. Make sure to discuss the business needs with a knowledgeable commercial insurance professional licensed in Texas. An experienced agent can advise about the cheapest options that meet the business coverage needs.

Does the Cost of Business Liability Insurance Go Down Over Time?

The cost of commercial liability insurance may go down over time depending on certain factors. For instance, being claim free over some years will most likely make the cost of your business liability insurance policy go down over time. This is because your insurance company no longer considers insuring your business as high risk. Also, properly managing the risks your business is exposed to will reduce the cost of your insurance policy over time. An example of such is taking theft prevention measures, like installing an alarm system in your store or hiring a security expert. Your insurer would have no reason to charge you more once they determine that insuring your business is a low risk.

How Much Business Liability Insurance Do I Need?

Texas is home to over 40 advanced business sectors, falling within the categories of: Biotech & Life Sciences, IT, Professional and Financial Services, Aerospace & Aviation, Industrial Manufacturing, Petroleum & Chemical Products, Logistics and Transportation, and Food and Beverage Processing. Over 3 million of Texas businesses are small businesses.

Such a diverse group of commercial operations requires a diverse set of business liability coverage. The amount of business liability insurance each business needs depends on the number of risks the business is exposed to and the basic assets of the business. The coverage the business gets needs to be able to restore the business to the state it was before a covered event occurred. A policy holderneeds as much coverage as possible to cover all the risks their business might be exposed to, without over-insuring - which leads to overpaying.

For example, a multimillion-dollar pharmaceutical company with office buildings in different locations and large cash reserves would need comprehensive business liability insurance coverage. This is because this entity is exposed to many liability risks, from consumers who may suffer adverse effects from using their products to employees, who can get injured at the workplace. An example of liability risks for the pharmaceutical company is failing to warn consumers about certain chemical ingredients that may cause allergies. In other cases, materials used in making packages can also cause physical injury to consumers. The higher the risk, the more coverage is needed.

The same logic applies to small businesses. For instance, a neighborhood bar may seem like it doesn’t need a lot of liability protection because it may not have a lot of assets, but by selling alcohol, it gets exposed to risks that non-alcohol-serving businesses do not even consider. Comparatively, a restaurant that generates most of its revenue from food sales, will pay a drastically lower cost for the same amount of liability coverage than a bar that makes the same revenue from selling drinks. Since the risks of alcohol-related accidents go up, the cost of coverage also grows proportionally.

Consult with a knowledgeable Texas-licensed commercial insurance agent to discuss your business liability insurance needs. An experienced agent will assess the business and guide through the choice of possible insurance coverages that best suit those needs.

How Much Business Liability Insurance Coverage Do I Need?

When considering how much business liability insurance a business needs, evaluate how much it will take to get the business back on its feet if the covered event occurs. You should not insure your Texas business for less than its value requires. How much you need also depends on the type of business you run, how the business operates and the number and type of risks it could potentially be exposed to.

For example, a financial services company, which stores sensitive client information, or a medical provider, which secures its patient’s personally identifiable information (PII) in compliance with HIPAA, would need comprehensive cyber liability coverage. This insurance coverage would protect such a company against financial loss arising from liability claims from data breaches.

You also need to determine the type of business liability insurance you require, whether general liability or professional liability insurance. For example, you will almost certainly require general liability insurance to cover consumer accidents and property damage if you own a store or an official place of business. Likewise, professionals like medical practitioners or consultants would need professional liability insurance to protect themselves against liability claims for negligence. You may be subject to both types of risks, and in such cases, businesses may be able to combine multiple coverages under one policy.

It is also important for you to know why you are buying business liability insurance in the first place when determining how much coverage to purchase. For example, your business may be required to purchase commercial liability insurance as a stipulation in the lease agreements or in order to secure a contract. In this case, the lessor or the other contracting party would let you know the amount of liability insurance they require you to get. It is important to note that liability coverage is typically bought in $1 million increments and the rest is determined by the specifics of each individual business.

Before purchasing business liability insurance, discuss the needs of the business with a knowledgeable Texas-licensed commercial insurance professional. An experienced agent can help you evaluate the business and determine how much liability coverage it needs.

How to Save on Business Liability Insurance?

Sometimes, business liability insurance can get expensive, and it is not every business owner that can comfortably afford it. Business owners can save on business liability insurance if they take the following steps:

• Shop around: Prices differ from one insurance provider to the next, so comparing prices is always a good idea as it will help you get the best possible price. You can compare insurance policies to find one with the cheapest premium rate that provides adequate coverage for risks your business is exposed to. Consult a licensed insurance agent to help you find the cheapest insurance packages.

• Combine policies: Combining your insurance policies can help you save money on premiums. For instance, instead of purchasing general liability and commercial property insurance policies separately, you can buy both under a Business Owner's Policy (BOP).

• Risk management: Another good way to lower the cost of business liability insurance is to manage your risks. Practicing proper workplace safety and putting measures in place to prevent a disaster can lower your premium rates because it shows your insurance provider that insuring your business is low-risk.

• Pay for only what you need - If you want to save costs on your business liability insurance, it is important that you simply pay for only the coverage you need. To do this, you will need to thoroughly assess your business insurance needs with the help of an insurance agent to help you know how much coverage you need. Then an insurance agent can help you pick the cheapest possible insurance plans while still providing you and your business with adequate protection.

Speak to your state-licensed insurance agent for personalized ways you can save on your business insurance policy.

Can you Negotiate the Price of Business Liability Insurance?

No. You can not negotiate the cost of your business liability insurance. However, you can choose only the amount of coverage necessary to protect your business. This will make your business liability insurance more cost-effective. Consult with a Texas-licensed insurance agent to help with this.

What is the Best Way to Save on Business Liability Insurance in Texas?

The best way to save on business liability insurance is by speaking with a knowledgeable and licensed commercial insurance agent who is able to quote multiple commercial insurers for comparison. An experienced agent can assess the needs of the business and structure the policy in such a way as to maximize the coverage for the lowest possible cost.

While this is true for any type of insurance, it is especially so for commercial liability because it has so many different types of coverages that can be assembled together in a myriad of different ways, depending on the needs of the applicant business. For example, instead of purchasing general liability and professional liability insurance separately, you can combine them under a Business Owners’ Policy (BOP).

Shopping for insurance without an agent is almost always a guarantee that you will pay more for coverage.

Another way to save on your business liability insurance is by managing the liability risks your company is exposed to. You can do this by setting up a risk management plan that prioritizes and mitigates certain risks, such as customers getting injured on your business property or by using your products.

What Can I Do if I Can’t Afford Business Liability Insurance?

As a business owner, you would want to be confident that your business and its assets are well protected. Therefore, it is necessary to purchase commercial liability coverage to protect you and your business against liability risks. However, with commercial liability insurance in Texas frequently costing in the tens of thousands of dollars per year, there may be occasions when the cash flow of the business does not allow for a lump-sum payment to get the adequate insurance coverage it needs. In situations like this, you may consider premium financing.

Insurance premium financing is essentially a kind of loan, where, rather than paying your insurance premium straight to your insurance company, you pay it with the help of a premium financing firm. The financing firm pays the insurance premium in full to the insurer, which allows the coverage to start, then the business pays the loan plus the interest back to the financier. Premium financing allows a business to spread the cost of insurance over the course of multiple months or even years. With this, the business can get the adequate insurance coverage it needs without paying premium costs that it cannot immediately afford. To cut down costs on business liability insurance you can try to mitigate the risks your business could face, combine your policies, or shop for more affordable coverage

Discuss the cost and affordability of business liability insurance with a knowledgeable insurance professional.

How Much Do you Save by Paying Business Liability Insurance Upfront?

A business can save a significant amount of money on commercial liability insurance if it pays the full annual amount all at once instead of in installments. Paying upfront is the lowest premium cost possible.

If a payment plan is selected, it must be done through a 3rd party premium financing company, which charges the business a finance fee for this type of a loan service. The annual finance rate is determined by the credit and claims history of the business and the current rate being offered by the banks. The average APR on premium financing in Texas is usually 7.5% to 12%, after the 15-20% down payment. The remaining is usually divided into 10 payments.

In addition to the premium finance fees, the financing company and/or the insurance agency may also add additional fees and taxes. The total cost of using premium finance can be as high as 20% in addition to the actual premium. A commercial insurance agent can help you shop not only for insurance coverage but also for premium financing options.

What Discounts are Available for Business Liability Insurance?

There are four main types of commercial liability insurance discounts a business can usually get in Texas:

• Safety discounts: An insurance company may offer this discount if they have seen that the insured business proactively manages liability risks. For example, if the business increases the safety training and readiness for the employees.

• Bundling discounts: If you buy different kinds of commercial insurance coverages from the same insurance company, you will most likely be eligible for a bundling discount. For example, if you own a medical practice, you can purchase your general liability insurance and medical malpractice from the same insurer and get a discount. In most cases, a business can save even more by bundling liability coverage with commercial property.

• Group discounts: These are discounts you may be eligible for based on your industry. It is usual for an insurance company to focus on a specific industry, such as farms or grocery stores. That particular insurance company may often provide specific discounts to companies operating in that industry.

• Loyalty discounts: Loyalty discounts are discounts insurance companies give to policyholders to reward them for staying with the insurance company and making referrals.

If you want to determine whether you are eligible for any business liability insurance discount, consult a knowledgeable state-licensed commercial insurance agent.