How Much Does Small Business Insurance Costs? 

Small business insurance costs from $14 to $124 per month, depending on what kinds of coverage you need. This includes things like general liability, property protection, business interruption, cyber liability, and workers’ compensation. If you decide to get all these types of coverage, it could cost you approximately $340 per month.

Small Business Insurance Costs: An Overview

On average, small businesses typically spend between $30 and $340 per month, which adds up to around $360 to over $4,000 per year, on insurance. Here’s a breakdown of the costs for different types of insurance that small business owners might need.

Type of policyAverage monthly costAverage annual cost
General liability insurance$30$360
Commercial property insurance$63$756 
Inland marine insurance$14 $169
Cyber liability insurance$123.75$1,485
Business interruption insurance$40$480
Workers compensation$70$840
Total average cost:$340.75$4,090
Sources: The Hartford, Hiscox and Insureon

How Much Does General Liability Insurance Cost?

General liability insurance typically costs about $30 per month for most business owners, according to a study by Hiscox. This study also revealed that 95% of business owners pay less than $50 per month for this insurance, and only 1% pay more than $100.

This type of insurance is important because it helps financially protect your business if someone sues you or makes a claim against you for injuries or damage to their property caused by your business activities.

Factors Affect General Liability Insurance Premiums

Several factors have a big impact on how much you pay for general liability insurance:

  • Building Size: If your business operates in a larger building with more people coming and going, you might pay more because there’s a greater chance of accidents.
  • Location: If your business is in an area with more crime or risks, your insurance costs could be higher.
  • Payroll and Revenue: The more money your business makes or spends, the more you might pay for insurance.
  • Claims History: If you’ve had to make claims on your insurance before, it can make your premiums go up.
  • Policy Details: The specific details of your insurance policy, like how much it covers and what your deductible is, will also affect the cost. This includes things like the maximum amount the insurance will pay for a single claim (per-occurrence limit) and the most it will pay during the policy period (aggregate limit).

How Much Is Commercial Property Insurance?

Commercial property insurance typically costs around $63 per year, as reported by Insureon. This is the middle price for a standard coverage plan that protects up to $60,000 worth of property with a $1,000 deductible.

How Much Is Commercial Property Insurance?

Insureon also found that nearly half (42%) of business owners pay between $46.67 and $83.33 each month for this type of insurance, while 16% pay even less than $46.67 monthly.

This insurance is essential because it helps financially safeguard your business in case your property gets stolen or damaged due to events like fires, natural disasters, or other unforeseen problems.

Factors Affect Commercial Property Insurance Costs

Several factors can affect how much you pay for commercial property insurance:

  • Location: If your business is in an area prone to natural disasters or other risks, your insurance costs may be higher.
  • Building Age and Size: Older or larger buildings tend to cost more to insure compared to smaller or newer ones.
  • Fire Protection: Having good fire protection measures in place, like sprinklers, fire alarms, and quick access to a fire department, can help lower your premiums.
  • Equipment Value: If your property contains expensive equipment, you may need to pay more for insurance since it covers the cost of items that are lost or damaged.
  • Types of Risks Covered: If you want your insurance to protect against additional risks, such as floods, earthquakes, or employee theft, you’ll likely have to pay extra.

How Much Does Workers Compensation Insurance Cost?

On average, workers’ compensation insurance costs about $70 per month or $840 per year for businesses with less than $300,000 in payroll expenses, according to The Hartford.

Workers’ compensation insurance is a type of coverage that provides assistance to employees who are injured while performing their job duties. This insurance typically covers expenses like medical bills and lost wages for injured workers.

In most states, having workers’ compensation insurance is a legal requirement if you have at least one employee. However, the specific laws regarding workers’ comp vary by state. For example, it’s not mandatory in Alabama if you have less than five employees or in Arkansas if you have fewer than three employees. Texas and Wyoming do not require workers’ compensation insurance.

Factors Affect Workers Compensation Insurance Costs

The cost of workers’ compensation insurance is influenced by three main factors:

  • Payroll Size: Generally, larger companies with bigger payrolls tend to pay more for workers’ compensation insurance.
  • Employee Job Duties: Jobs that involve higher risks, such as construction or mechanics, often come with higher workers’ compensation costs compared to lower-risk jobs like office work.
  • Location: Some states, like North Dakota, Ohio, Wyoming, and Washington, require you to purchase state-funded workers’ compensation insurance by law. In these states, you have no other options. However, in other states, you can explore different workers’ compensation insurance quotes on the private market.

On average, the total cost for all six types of insurance policies mentioned earlier is approximately $340.75 per month or $4,090 per year.

How Much Is Business Interruption Insurance?

Business interruption insurance typically falls within the range of $40 to $130 per month, which translates to an annual cost of approximately $500 to $1,500, according to information from Insureon.

How Much Is Business Interruption Insurance?

This type of insurance is designed to provide financial support to your business if it needs to temporarily shut down due to a covered incident. It helps cover various expenses, including lost income, mortgage or rent payments, loan repayments, taxes, payroll, relocation expenses, and training costs during the period of disruption.

Factors Affect Business Interruption Insurance Costs?

The cost of business interruption insurance is determined by three key factors:

  • Revenue: The insurance premium for business interruption is influenced by your company’s revenue. Higher revenue levels result in higher premiums because the insurance needs to cover potential lost income.
  • Industry: Certain industries, such as restaurants, are more prone to property damage and disruptions. Consequently, they tend to pay higher premiums for business interruption insurance due to the increased risk.
  • Property Value: The value of your commercial property plays a role in determining the cost of business interruption insurance. Generally, businesses with higher property values will pay more for this coverage.

How Much Does Inland Marine Insurance Cost?

Inland marine insurance typically costs around $14 per month or $169 per year, based on data from Insureon. This cost represents the median price for coverage worth $5,000.

Interestingly, a $5,000 coverage limit is the most commonly chosen option among Insureon’s customers, particularly in industries like landscaping, cleaning, installation, and construction. In contrast, photographers and videographers tend to opt for higher coverage limits, such as $86,000, with a median annual premium of $580, while architects and engineers often go for even higher limits.

Inland marine insurance serves to protect your business in case something happens to your property or products while they are in transit. This coverage extends to goods being shipped to or from your business and property used for work purposes, like lawnmowers or camera equipment.

Factors Affect Inland Marine Insurance Costs?

The main factor that significantly affects inland marine insurance costs is the value of your equipment or products. Small business owners who need to transport valuable equipment or products should anticipate higher premiums for their inland marine coverage.

How Much Is Cyber Liability Insurance?

Small business owners typically pay around $140 per month or $1,675 per year for cyber liability insurance, as reported by Insureon. A good portion of businesses (27%) pay less than $1,000 annually for this coverage.

How Much Is Cyber Liability Insurance?

A standard cyber insurance policy usually includes a $1 million coverage limit for each cyber event, a total coverage limit of $1 million, and a $1,000 deductible, according to Insureon.

Cyber liability insurance is designed to provide financial assistance if your business faces a cyberattack. It helps cover the expenses involved in repairing or recovering from a cyberattack, including legal costs and settlements.

Factors Affect Cyber Liability Insurance Costs

The cost of cyber insurance depends on several key factors:

  • Industry: Businesses in industries more susceptible to cyber risks may need higher coverage, leading to higher premiums.
  • Revenue and Expenses: The higher your company’s income, costs, and operating expenses, the more you may pay for cyber insurance.
  • Network Security: Your level of network security practices can affect your risk of cyber claims, impacting your premiums.
  • Access to Systems: The number of people with access to your systems and data can influence risk levels and, in turn, premiums. More access rights can mean higher risk.
  • Claims History: If you’ve had cyber insurance claims in the past, it could affect how much you pay for future cyber insurance premiums.

What Factors Affect the Cost of Your Small Business Insurance?

The cost of business insurance boils down to a few key factors:

  • Industry: Some businesses are riskier than others, leading to higher premiums. For instance, architects working on public buildings pay more for professional liability insurance than insurance agents working with individuals.
  • Location: Where you operate matters. State laws can impact insurance rates, especially for workers’ compensation and commercial auto insurance. Higher claim rates in certain areas can also raise premiums.
  • Size: The number of employees you have affects insurance costs. More employees mean more potential for incidents, so larger businesses typically pay more.
  • Payroll and Sales: Workers’ compensation costs relate to your annual payroll, while general liability insurance rates depend on your revenue. More payroll or sales can lead to higher premiums.
  • Prior Claims: A history of insurance claims suggests risk, which can increase costs.
  • Coverage and Deductibles: The extent of coverage and deductible levels influence your insurance expenses. More coverage and lower deductibles often mean higher premiums.

How To Reduce Small Business Insurance Costs

Business insurance is crucial for safeguarding your company from costly setbacks, but it can be pricey, especially for small businesses. Here are some ways to lower your business insurance costs:

  • Consider a BOP: A Business Owners Policy bundles three essential coverages (general liability, property, and business interruption insurance) into one, often costing less than separate policies.
  • Compare Quotes: Shop around and get quotes from different insurance providers. Price is important, but also check their financial strength and customer satisfaction.
  • Bundle Coverage: Many insurers offer discounts when you combine multiple policies. Look for pre-packaged options like a Business Owner’s Policy.
  • Choose a Higher Deductible: A higher deductible means you’ll pay more if you make a claim, but it lowers your monthly premiums.
  • Prevent Losses: Take proactive steps to minimize risks since your claims history affects premiums. Your insurance company might offer resources and training to help prevent incidents.
  • Update Coverage: Keep your insurer informed about changes in your business, such as expansion or downsizing, to ensure you have the right coverage and potentially save on premiums.

Small Business Costs: FAQs

How Much Is Liability Insurance for a Business?

The price of liability insurance for a small business depends on what your business does, where it operates, your past claims, and the coverage limits you pick. Small, low-risk businesses might pay around $200 or even less each year for general liability insurance and $300 or less each year for professional liability insurance.

How Much Insurance Coverage Should a Business Have?

To simplify, here’s the advice from experts:

  • The Small Business Administration suggests getting business insurance for anything you couldn’t afford to pay for yourself.
  • The U.S. Chamber of Commerce recommends insuring your business property for its full value and having enough liability coverage to protect your assets. This means higher coverage for a sole proprietorship and less for an LLC.
  • A popular choice for small businesses is a Business Owner’s Policy (BOP) with $1 million coverage for each incident in general liability and a total of $2 million for multiple incidents.

Is Business Insurance Required?

Businesses need different types of insurance based on where they are and what they do:

  • Workers’ Compensation: Usually required for businesses with employees.
  • Commercial Auto Insurance: Required if your business owns and uses vehicles on public roads.
  • Professional Liability Insurance: Mandatory for legal and medical professionals in certain states.

The specific requirements can vary by industry and location.

Is Business Insurance Tax-Deductible?

In most cases, yes, you can deduct certain business insurance costs from your taxable income. These deductions can include things like commercial property insurance, employee health insurance, liability insurance, workers’ compensation insurance, and business interruption insurance. However, there are some insurance costs, like life insurance and annuity premiums, that you can’t deduct, along with self-insurance reserve funds.

Do I Need International Business Insurance?

If your business operates in other countries, regular insurance may not cover events there. To protect against global risks involving employees, customers, or suppliers abroad, you’ll need international business insurance or a multinational endorsement.

Final Thoughts

Small business insurance costs vary widely based on factors like the type of coverage needed, business size, location, and industry, but careful consideration of coverage options and potential savings strategies can help small businesses manage and afford their insurance expenses.

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