How to Calculate General Liability Insurance Rate – Cost Calculator

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General Liability Insurance Premium Calculator

Estimate your annual business insurance costs based on exposure and risk rating.

Total Annual Exposure ($ Revenue/Payroll)

Carrier Base Rate (Per $1,000)

Experience Modifier (1.0 = Average)

Additional Fees & Taxes ($)

Estimated Annual Premium

$0.00

How General Liability Insurance Rates Are Calculated

General liability (GL) insurance is a fundamental coverage for businesses that protects against third-party claims of bodily injury, property damage, and personal injury. Unlike fixed-cost personal insurance, commercial GL rates are dynamic and based on the scale of your business operations.

The standard industry formula for calculating a GL premium is:

(Total Exposure / 1,000) × Base Rate × Experience Modifier + Fees = Total Premium

Key Factors in the Calculation

Total Exposure: This is the size of the "risk" the insurance company is taking. For most industries, this is calculated based on Gross Sales (Revenue). For contracting or service industries, it may be based on Total Payroll.
Base Rate: This is a numerical value assigned to your specific business class (ISO code). A retail store will have a much lower base rate than a roofing company because the risk of a claim is significantly lower.
Experience Modifier (Ex-Mod): This factor adjusts your premium based on your claims history. A modifier of 1.0 means your risk is average. A modifier of 0.85 means you have a safe history (15% discount), while 1.25 means a higher claim frequency (25% surcharge).

Real-World Example

Imagine a small landscaping company with the following metrics:

Annual Revenue (Exposure): $250,000
Carrier Base Rate: $12.00 per $1,000 of revenue
Experience Mod: 1.0 (average)

The calculation would be: ($250,000 / 1,000) = 250 units of risk. 250 × $12.00 = $3,000. If there are $200 in policy fees, the total annual premium is $3,200.

How to Lower Your Rate

To reduce your general liability costs, focus on improving safety protocols to lower your Experience Modifier over time. Additionally, ensure your business is classified correctly; being placed in a high-risk category when you perform low-risk work can unnecessarily inflate your Base Rate.