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A $1 million general liability policy costs about $42 a month for a typical small business, or about $500 a year. That figure is the median Simply Business customers paid for $1 million in general liability coverage in the second half of 2025, and it covers a $1 million per-occurrence limit, usually paired with a $2 million aggregate. Many low-risk businesses pay under $50 a month, and some pay under $30. The same policy costs a general contractor about $142 a month and a bar about $218, according to Insureon. This guide covers what a $1 million policy costs by industry and state, what the limit actually buys you, and what it costs to raise it.
What does a $1 million general liability policy mean?
A $1 million general liability policy means your insurer will pay covered costs up to $1 million for a single covered incident. That is the per-occurrence limit. Most policies pair it with a $2 million aggregate, which caps what the insurer pays across all claims in the policy year. When a landlord, client, or contractor asks for proof of $1 million in coverage, this $1 million per occurrence and $2 million aggregate structure is what they mean. It is the structure on about 85 percent of small business policies.
General liability covers three kinds of third-party claims: bodily injury to someone who does not work for you, property damage your business causes, and personal and advertising injury, such as a claim that your ad copied a competitor’s work. It does not cover your own employees, your own property, your professional mistakes, or your vehicles. Each of those is a separate policy. Our guide to general liability vs professional liability explains where one stops and the other starts, and our how much general liability coverage you need guide explains when $1 million is the right limit and when it is not enough.
What a $1 million policy costs by industry
Your industry classification is the single biggest driver of what a $1 million policy costs, bigger than your state, your revenue, or the limit itself. Insureon calculates its benchmarks from the median cost of policies actually sold to its small business customers, and its 2025 to 2026 data shows a sixfold spread between the cheapest and most expensive industries buying the same $1 million per-occurrence and $2 million aggregate limits.
| Industry | Monthly premium, $1M/$2M policy | Annual premium |
|---|---|---|
| Professional services, consulting | $29 | $350 |
| IT consultant, home office | $32 | $384 |
| Food and beverage, average | $44 | $525 |
| Coffee shop | $47 | $564 |
| Cleaning business | $48 | $580 |
| Landscaping and lawn care | $51 | $610 |
| General contractor | $142 | $1,700 |
| Bar or tavern | $218 | $2,616 |
A solo IT consultant and a general contractor buy the identical $1 million policy and pay premiums that differ by more than $1,300 a year, purely on risk classification. The consultant works from a desk and rarely meets a client in person. The contractor works on other people’s property with heavy equipment and subcontractors. The insurer prices the chance of a claim, not the size of the policy, and the chance is far higher for the contractor.
MoneyGeek’s 2026 analysis puts the national average higher, at $123 a month for a $1 million per-occurrence and $2 million aggregate policy for businesses with one to four employees. The gap between MoneyGeek’s $123 average and Simply Business’s $42 median is a lesson in reading insurance statistics. An average counts the roofing contractors and the bars. A median counts the business in the middle. Most small businesses are low to medium risk, so the median is closer to what most owners actually pay. Our general liability cost guide for small businesses breaks down the same pricing by business type and explains what moves the number.
What a $1 million policy costs by state
State matters, but less than industry. Local laws, claim trends, and the cost of defending a lawsuit in that state all feed into the premium. Insuranceopedia’s 2026 state guides put a $1 million general liability policy at about $69 a month in New York, or about $824 a year, and about $69 a month in Arizona, or about $763 a year. Michigan’s range runs wider, from $40 to $150 a month depending on industry and claims history. New York’s general liability average for small businesses sits around $42 a month, while Arizona’s sits around $45.
The state figures show the same pattern as the national ones: the range inside a state is wider than the gap between states. A low-risk home-based business in New York can pay under $30 a month, while a high-traffic retail shop in the same city can pay over $100. Your state sets the floor. Your industry and your claims history set where you land above it.
What the $1 million limit actually buys you
The limit buys you two things: payment for covered claims up to $1 million per incident, and a legal defense paid by the insurer. The defense matters as much as the payment. A slip-and-fall claim that settles for $40,000 can cost $60,000 to defend, and the insurer pays the defense costs. That is why a $1 million policy is the default in most commercial leases and client contracts: the landlord or client wants to know there is a real insurer and a real defense behind the certificate you hand them.
The limit also has a hard edge. If a judgment comes in at $1.3 million and your per-occurrence limit is $1 million, you owe the $300,000 difference from your own assets. The policy does not stretch. Businesses that face that risk buy more limit, and the cheapest way to do it is usually a commercial umbrella policy rather than a bigger primary policy. Our guide to umbrella insurance cost per million shows what each extra million adds, and it is often $35 to $50 a month for the first extra million.
Our business liability insurance types guide covers the other policies that sit alongside general liability, and our business owner’s policy guide explains how bundling general liability with commercial property into one package can cut 20 to 30 percent off buying them separately.
How much more does $2 million cost?
Moving from $1 million to $2 million per occurrence usually adds a fraction of the base premium, not double. The reason is that most claims are small. The first million covers the vast majority of incidents, so the second million is priced for the rare large claim. The exact step-up depends on your industry and your insurer, so ask for both quotes when you shop. If the step from $1 million to $2 million costs $15 a month and your biggest client requires $2 million, the decision makes itself.
| Option | What it adds | Typical extra cost |
|---|---|---|
| Raise primary GL to $2M per occurrence | Higher limit on the same policy | A fraction of the base premium |
| Add a $1M commercial umbrella | Extra $1M over GL and other policies | About $35 to $50 a month |
| Stay at $1M per occurrence | Nothing | $0, but you owe anything above $1M |
Consider higher limits when your work creates outsized exposure: contractors whose mistakes can damage an entire building, restaurants with heavy foot traffic, businesses whose products could injure many people at once, and anyone signing contracts that demand $2 million or $5 million per occurrence. Revenue growth is the other signal. A $300,000-a-year business and a $5-million-a-year business face very different lawsuit exposure, and underwriters know it. As revenue climbs, raising limits is usually cheap relative to the protection gained.
What moves the price of a $1 million policy?
Five factors set your premium. Industry classification comes first, as the table above shows. Revenue comes second, since a business doing $5 million a year has more exposure than one doing $300,000. Location comes third, through local claim costs and lawsuit trends. Claims history comes fourth: a business with a recent liability claim pays more, and a clean record earns a better rate. The fifth factor is how you buy. Paying annually instead of monthly can save the installment fees, and bundling general liability into a business owner’s policy usually costs less than buying general liability and property cover separately.
There is one more factor that owners control and often miss: the class code. Insurers sort every business into a risk class before they quote, and the code they assign decides which rate table you land in. A business described too broadly can be coded into a riskier class than it belongs in. When you get a quote, check the class code on it and ask your agent whether a narrower description fits your actual work. A consultant who does no on-site work should not be coded like a contractor who does.
To keep the premium down, keep your certificate of insurance current, report claims promptly, and shop the policy at renewal rather than letting it auto-renew. Rates for the same $1 million policy vary widely between carriers, and a business that has gone a year without a claim is in a stronger position to negotiate than it was the year before.
Frequently asked questions
How much is a $1 million general liability insurance policy per month?
About $42 a month for a typical small business, according to Simply Business data on policies sold in the second half of 2025. Low-risk businesses often pay under $30 to $50 a month, while high-risk trades like roofing and bars pay $142 to $218 a month for the same $1 million limit.
What does $1 million per occurrence and $2 million aggregate mean?
The per-occurrence limit is the most the insurer pays on any single claim, which is $1 million. The aggregate is the most it pays on all claims combined in the policy year, which is $2 million. Both numbers appear on the certificate of insurance you give to clients and landlords.
Is $1 million of general liability enough for a small business?
For most small businesses, yes, and it is the limit most leases and client contracts require. It is not enough if your contracts demand $2 million, if your work could damage a whole building, or if your products could injure many people at once. In those cases, buy a higher limit or add an umbrella policy.
How much does it cost to raise general liability from $1 million to $2 million?
Usually a fraction of the base premium, not double, because most claims fall well under $1 million. A $1 million commercial umbrella policy, which adds a million over your general liability and other policies, typically costs about $35 to $50 a month.
Does general liability cover my employees?
No. General liability covers claims from third parties, meaning people who do not work for you. Injuries to your own employees are covered by workers compensation, which is a separate policy that most states require once you hire anyone.
Can I get a $1 million general liability policy if I work from home?
Yes. Home-based businesses are usually the cheapest to insure, and a $1 million policy for a consultant or designer working from a spare room often runs $25 to $40 a month. A home-based business still needs the coverage, because a client who visits or a product that causes harm creates the same liability as a storefront does.
Sources: Simply Business, $1 Million General Liability Insurance Cost 2026 (median about $42 a month, policies sold second half of 2025), Insureon industry cost pages 2025 to 2026 (industry monthly premiums at $1M per-occurrence and $2M aggregate limits), MoneyGeek 2026 general liability cost report ($123 a month average for businesses with 1 to 4 employees), Insuranceopedia 2026 state guides (New York, Arizona, Michigan $1 million policy figures).
