How Much Does Small Business Insurance Cost?
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Small business insurance is crucial for protecting your enterprise from financial risks and unforeseen events that could jeopardize its stability. It encompasses various policies tailored to different risks, including general liability insurance for third-party claims, property insurance for damage to physical assets, workers' compensation for employee-related incidents, and professional liability insurance for service-related errors. Additionally, it covers business interruption, commercial auto, and cyber liability risks.
The cost of insurance varies based on factors like business size, industry, location, and coverage needs. Investing in the right type of business insurance ensures financial stability, legal compliance, and business continuity, helping safeguard your business’s long-term success.
Jump To
Cost of small business insurance
Here’s a look at the average cost of small business insurance.
General liability insurance
A general liability insurance policy is designed to cover third-party claims of bodily injury, property damage, and personal injury such as defamation. For small to medium-sized businesses, the annual cost of general liability insurance typically ranges from $400 to $1,500. General liability insurance cost varies based on factors such as the type of business, the level of risk associated with the industry, the business location, and the amount of coverage required. For example, a small retail store might pay around $600 annually, while a construction company with higher risks may face significantly higher premiums.
Commercial property insurance
Commercial property insurance provides coverage for damage to business property caused by events like fire, theft, or vandalism. Factors influencing this cost include the value of the property, the location of the business (with higher costs in areas prone to natural disasters), the age of the building, and the type of coverage chosen (such as replacement cost versus actual cash value). Commercial property insurance cost falls between $500 and $3,000 per year. A small office with minimal equipment might have an annual premium of about $800, whereas a business with extensive inventory located in a high-risk area could see much higher costs.
Workers' compensation insurance
Workers' compensation insurance is crucial for covering medical expenses and lost wages for employees who are injured or become ill due to their work. Costs are generally calculated based on a rate of $0.75 to $2.74 per $100 of payroll. The industry classification of the business, the number of employees, state regulations, and the business’s location all impact the cost. For instance, a business with a $100,000 payroll might pay between $750 and $2,740 annually, with higher insurance rates for businesses in more hazardous industries.
Professional liability insurance
Professional liability insurance, also known as Errors and Omissions Insurance, protects against claims of negligence, mistakes, or failures to perform professional duties. This insurance is particularly relevant for service-based businesses. The annual cost typically ranges from $500 to $2,000. Factors such as the industry’s risk level, the size of the business, coverage limits, and the business’s claims history affect the monthly premium. A small consulting firm might expect to pay around $1,000 annually, while a medical practice could face higher premiums.
Many Lenders Fund In 24-48 Hours. Start Your Request Today!
Get your small business funded fast! Go to the LendingTree® official site to compare 2024’s top online lenders and get offers.
Secure and Fast.
Business interruption insurance
Business interruption insurance helps cover the loss of income and operating expenses if a business has to temporarily close due to a covered event such as a fire or natural disaster. The cost for this coverage varies based on business revenue and the extent of coverage needed, but small businesses generally pay between $1,000 and $3,000 annually. For example, a high-revenue restaurant might see a premium of about $2,500.
Commercial auto insurance
A commercial auto insurance covers vehicles used for business purposes, including liability, collision, and comprehensive coverage. The annual cost per vehicle typically ranges from $1,200 to $4,500. Factors affecting the cost include the type of vehicle, its usage (e.g., delivery versus personal use), the driving history of those operating the vehicle, and the location. A business with several delivery vans might pay around $3,000 per vehicle annually.
Cyber liability insurance
Cyber liability insurance is designed to protect against losses from data breaches, cyber-attacks, and other technology-related risks. Small businesses usually pay between $1,000 and $7,500 per year for this coverage. The cost is influenced by the size of the business, the amount of data it handles, and the type of coverage required (such as first-party versus third-party coverage). For a small e-commerce business, the annual premium might be around $2,000, while a larger firm with extensive customer data could incur higher costs.
To manage insurance costs effectively, businesses can consider bundling policies with the same insurer for potential discounts, increasing deductibles to lower premiums, implementing safety measures and risk management practices, and regularly reviewing coverage to ensure it matches their current needs.
Many Lenders Fund In 24-48 Hours. Start Your Request Today!
Get your small business funded fast! Go to the LendingTree® official site to compare 2024’s top online lenders and get offers.
Secure and Fast.
Insurance companies offering small business insurance
Nationwide
Nationwide provides a comprehensive range of business insurance products, including General Liability coverage, Property Insurance, Workers' comp, and Business Interruption Insurance. They are recognized for their broad range of coverage options and the ability to bundle policies for potential discounts. Nationwide’s extensive network of insurance agents also ensures that small business owners receive personalized service.
The Hartford
The Hartford is another well-established insurer offering a variety of business insurance products suitable for small enterprises. Their offerings include General Liability, Property Insurance, Workers' Compensation, and Professional Liability, as well as Business Owner’s Policies. The Hartford is known for its extensive experience with small businesses and offers a wide range of customizable options to meet diverse needs.
State Farm
State Farm offers a broad spectrum of insurance coverage for small businesses, including General Liability, Property Insurance, and Business Auto Insurance. They also provide specialized coverages tailored to various industries. State Farm is known for its local agents, which provide personalized service and assistance, making it easier for business owners to navigate their insurance needs.
Progressive
Progressive is primarily recognized for its Commercial Auto Insurance but also offers General Liability, Property Insurance, and Professional Liability. Progressive stands out for its user-friendly online platform, which allows small business owners to obtain quotes and manage their policies with ease. This convenience is a significant advantage for businesses seeking straightforward insurance solutions.
Pros and cons
Pros
- Financial protection. Insurance provides a safety net against financial losses due to unforeseen events like property damage, liability claims, and business interruptions. This protection helps prevent significant financial strain on your business.
- Legal compliance. Certain types of policy, such as Workers' Compensation, are legally required in many jurisdictions. Having the necessary insurance ensures compliance with legal requirements, avoiding potential fines and legal issues.
- Risk management. Insurance helps manage and mitigate risks associated with running a business. By covering various types of liabilities and damages, it reduces the financial impact of potential claims and accidents.
Cons
- Cost. Insurance premiums can be a significant expense, especially for small businesses with limited budgets. The cost varies based on coverage needs, industry risks, and business size.
- Coverage limitations. Policies may have exclusions or limitations that can leave gaps in coverage. It's important to thoroughly review and understand policy terms to ensure all potential risks are adequately covered.
- Claims process. Filing and managing claims can be time-consuming and may involve extensive documentation and negotiation. The claims process can sometimes be frustrating if claims are denied or delayed.
FAQs
How do I choose the right insurance provider?
When choosing an insurance provider, consider factors such as their reputation, financial stability, customer service, and the range of coverage options they offer. It’s also helpful to compare business insurance quotes from multiple providers to find the best fit.
Is business insurance required by law?
Some types of insurance are legally required. For example, most states mandate Workers' Compensation Insurance for businesses with employees. Other requirements may vary by location and industry.
Can I customize my business insurance policy?
Yes, many insurance providers offer customizable policies to fit the specific needs of your business. You can choose coverage options, policy limits, and deductibles based on your risk profile and requirements.
What should I do if I need to file a claim?
If you need to file a claim, contact your insurance provider as soon as possible to report the incident. Provide all necessary documentation and cooperate with the insurance claim process. Your insurer will guide you through the steps to resolve the claim and determine the compensation you may be entitled to.
Many Lenders Fund In 24-48 Hours. Start Your Request Today!
Get your small business funded fast! Go to the LendingTree® official site to compare 2024’s top online lenders and get offers.
Secure and Fast.
The bottom line
Small business insurance policy is essential for protecting your business from financial risks and unforeseen events. It provides crucial coverage against various threats, including property damage, liability claims, and employee-related issues, helping ensure the stability and continuity of your business.
While the cost of insurance can vary widely depending on factors such as the type of insurance, business size, industry, and location, investing in the right policies is vital for managing risks effectively. It also helps in compliance with legal requirements, enhancing your business’s credibility, and offering protection for both employees and assets. To optimize insurance costs, consider bundling policies, paying higher deductibles, implementing risk management practices, and regularly reviewing your coverage needs.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Share this article
