As a small business owner, protecting your company from unexpected risks is crucial. Small business insurance helps safeguard your business against lawsuits, property damage, employee injuries, and other financial setbacks. But how much should you expect to pay for coverage? The answer depends on various factors, including the type of business, industry risks, and coverage needs.
Average Costs of Small Business Insurance
The cost of business insurance varies widely, but here’s a general breakdown of the average monthly and annual costs for common types of coverage:
- General Liability Insurance
- Covers third-party bodily injury, property damage, and legal fees.
- Average Cost: $30–$60 per month ($360–$720 per year).
- Professional Liability (Errors & Omissions) Insurance
- Protects against claims of negligence or mistakes in professional services.
- Average Cost: $50–$100 per month ($600–$1,200 per year).
- Business Owner’s Policy (BOP)
- Bundles general liability and commercial property insurance for a cost-effective solution.
- Average Cost: $100–$250 per month ($1,200–$3,000 per year).
- Workers’ Compensation Insurance
- Required in most states if you have employees; covers medical expenses and lost wages for work-related injuries.
- Average Cost: $40–$100 per month per employee.
- Commercial Auto Insurance
- Covers business-owned vehicles in case of accidents, theft, or damage.
- Average Cost: $100–$200 per month per vehicle.
- Cyber Liability Insurance
- Protects against financial losses from data breaches and cyberattacks.
- Average Cost: $75–$200 per month.
Factors That Affect Small Business Insurance Costs
Several factors influence the cost of your small business insurance policy, including:
- Industry Risks: Businesses in high-risk industries, such as construction or healthcare, typically pay more.
- Business Size & Revenue: Larger businesses with higher revenue often require more coverage.
- Location: Insurance rates vary by state and city due to differences in regulations and risks.
- Coverage Limits & Deductibles: Higher coverage limits and lower deductibles lead to higher premiums.
- Claims History: A history of insurance claims may increase your premiums.
How to Lower Your Small Business Insurance Costs
- Compare Quotes: Get multiple quotes from different insurers to find the best rate.
- Bundle Policies: Many insurers offer discounts when you combine policies like general liability and commercial property insurance into a Business Owner’s Policy (BOP).
- Increase Your Deductible: A higher deductible can lower your monthly premium, though it means paying more out-of-pocket in case of a claim.
- Minimize Risks: Implementing safety protocols and security measures can lower your insurance costs.
- Work with an Independent Insurance Broker: Brokers can help you find customized policies at competitive rates.
Final Thoughts
Small business insurance is a necessary investment to protect your business from financial losses. While costs vary, understanding the different types of coverage and factors that affect pricing can help you make an informed decision.
If you’re looking for the best coverage at an affordable price, consider working with an experienced insurance agent who can tailor a policy to fit your business needs.