How Much Does Small Business Insurance Cost – Forbes Advisor

Editorial Note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not influence the opinions or ratings of our editors.

Small business insurance costs anywhere from about $14 to $124 per month, depending on which types you buy—general liability, commercial property, business interruption, inland marine, cyber liability, and/or workers’ compensation. If you purchase all of these types of coverage, you’ll likely pay about $340 per month.

Here’s an overview of how these costs break down and what factors affect rates the most when shopping for the best small business insurance.

Business insurance costs at a glance

General liability insurance costs.

General liability insurance protects you from lawsuits or claims if someone is injured on your property or you are responsible for damage to someone else’s property. It typically costs about $30 a month, according to a recent Hiscox survey. The survey also found that 95% of business owners pay less than $50 per month and only 1% pay more than $100.

What factors affect liability insurance premiums?

These four factors have the biggest impact on liability insurance premiums:

  • Size of the building. Larger buildings create more opportunities for accidents. So if you work in a larger facility with more people, you can pay more.
  • Location. Businesses operating in high-risk areas with higher crime rates may pay more for liability insurance.
  • Amount of wages and annual income. The higher your expenses or operating expenses, the more you can expect to pay for liability insurance.
  • Claim history. If you have made general liability claims in the past, this can increase your premiums.
  • Policy details. Coverage limits, deductibles, and other policy details affect the cost of your business insurance.

Commercial property insurance costs

Commercial property insurance protects your business against losses in the event of fire, natural disaster, theft or other problems.

The average cost of commercial property insurance is $63 per year, according to Insureon. This is for a standard coverage limit of $60,000 with a $1,000 deductible.

Insureon found that nearly half (42%) of business owners pay between $46.67 to $83.33 per month for commercial property insurance, while 16% pay less than $46.67.

What factors affect the cost of commercial property insurance?

Several factors can affect the cost of commercial property insurance:

  • Location. Operating in a high-risk area prone to natural disasters can increase premiums.
  • Age and size of the building. Older or larger buildings will cost more to insure than smaller or newer buildings.
  • Types of fire protection. Having a sprinkler system, fire alarms and easy access to a fire station can lower the cost of your premiums.
  • Equipment costs. Commercial property insurance reimburses you for lost or damaged items on your property, so expect to pay more if you’re storing expensive equipment.
  • Types of perils covered. Like home insurance, you’ll pay more if you need to cover additional risks to your business, such as floods, earthquakes or employee theft.

Business interruption insurance costs

If your business has to be temporarily closed due to a loss covered by your policy, business interruption insurance helps you compensate for lost income and pay operating expenses during that time. This includes lost income, mortgage, lease or rent payments, loan payments, taxes, wages, moving expenses, and education expenses.

The average cost of business interruption insurance is between $40 and $130 per month, or $500 and $1,500 per year, according to Insureon.

What factors affect the cost of business interruption insurance?

Three main factors will affect the cost of business interruption insurance:

  • income. Since business interruption insurance covers lost revenue, the higher the company’s revenue, the higher the insurance premium will be to cover this.
  • Industry. Industries such as restaurants are more likely to experience property damage and will pay a higher business interruption insurance premium.
  • The value of your business’s assets. Generally, the higher the value of your commercial property, the more you will pay for business interruption insurance.

Inland Sea Insurance Costs

Inland marine insurance protects your business if something happens to your property or products in transit. This could include goods being shipped to or from your business or property used for work purposes (such as lawnmowers or camera equipment).

The average cost of inland marine insurance is $14 per month or $169 per year, according to Insureon. This is for a coverage limit of $5,000.

Insureon found that the $5,000 coverage limit was the most popular choice among customers for those in the landscaping, cleaning, installation and construction industries.

By comparison, photographers and videographers typically choose a policy limit of $86,000 (which has an average annual premium of $580), while architects and engineers purchase higher coverage limits.

What factors affect the cost of inland marine insurance?

There is one main factor that affects inland marine insurance: Equipment or product costs. Small business owners who need to transport expensive equipment or products can expect to pay higher premiums.

Cost of cyber liability insurance

Cyber ​​liability insurance protects businesses from financial losses that may occur as a result of a cyber attack. This type of insurance can cover costs associated with repairing or rebuilding your business after a cyberattack, as well as legal fees and settlements.

The average cost of cyber liability insurance is $123.75 per month, or $1,485 per year, according to AdvisorSmith. But companies can pay as little as $650 a year, or up to $2,357, depending on their industry.

For example, AdvisorSmith found that companies in the payment processing, financial services, investment services, legal and insurance industries pay the most for cyber insurance. Companies from transport and logistics, administrative services, production, car dealerships and construction pay the least.

What factors affect the cost of cyber liability insurance?

There are several main factors that affect the cost of cyber insurance:

  • Industry. Companies that are more exposed to cyber risk may need policies with higher levels of coverage and therefore higher premiums.
  • Your company’s income and expenses. The higher your income, expenses and operating expenses, the more you can expect to pay for cyber insurance.
  • Your network security. Strong network security practices, or lack thereof, impact your risk of cyber claims.
  • The number of people who have access to your systems and data. More access rights can mean more risk, leading to higher premiums.
  • Your claim history. Past cyber insurance claims may affect future cyber insurance premiums.

Workers’ Compensation Insurance Costs

Workers’ compensation insurance is a type of insurance that helps employees who are injured on the job. The insurance company usually helps pay for medical expenses and lost wages, among other things.

The average cost of workers’ comp insurance is $70 per month, or $840 per year for businesses with less than $300,000 in payroll expenses, according to The Hartford.

In most states, you are required by law to have workers’ compensation if you have at least one employee. But worker laws vary by state. For example, you don’t have to if you operate in Alabama with fewer than five employees or in Arkansas with fewer than three employees. Workers insurance is not required in Texas or Wyoming.

What Factors Affect the Cost of Workers’ Compensation Insurance?

Three main factors affect labor costs:

  • Amount of wages. The larger your company and the larger your payroll, the more you can expect to pay for workers’ compensation insurance.
  • Job duties of employees. Expect to pay more for employees who have riskier job duties. For example, worker costs for office work will be lower than those for hands-on activities such as construction or mechanical work.
  • Location. If you live in a monopoly state, such as North Dakota, Ohio, Wyoming, or Washington, you are required by law to buy state-funded workers. You have no other options. But in other states, you can shop around for jobber quotes in the private market.

For all six policy types above, expect to pay a total of about $340.75 per month, or an average of $4,090 per year.

How to reduce the cost of business insurance

Business insurance is an important way to protect a company from costly damage. This can be a significant expense, especially for small businesses.

One of the best ways you can save is by purchasing a business owners policy (BOP). BOP combines three main types of coverage: general liability insurance, commercial property insurance, and business interruption insurance. It is usually cheaper to buy a BOP than three separate policies.

Here are some more tips to keep your business insurance costs down:

  • Shop and compare quotes from multiple insurance companies.
  • Bundle multiple policies together from the same insurer, such as property and liability insurance.
  • Pay your premiums annually instead of monthly.
  • Increase your deductible – if you can afford the out-of-pocket costs you would pay to file a claim.
  • Avoid risks that could lead to a claim.

Business insurance made easy

Compare free quotes from leading insurers at SimplyBusiness. Get a policy in less than 10 minutes.

Leave a Comment

Your email address will not be published.