How Much Does Small Business Insurance Cost – Forbes Advisor

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

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

Business insurance costs at a glance

Cost of General Liability Insurance

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

What factors affect general liability insurance premiums?

These four factors most affect general liability insurance premiums:

  • The size of the building. Larger buildings offer more opportunities for accidents. So if you operate in a larger facility with more foot traffic, you may pay more.
  • location. Businesses that operate in high-risk areas with higher crime rates may pay more for liability insurance.
  • Payroll size and annual revenue. The higher the expenses or operating costs, the more you can expect to pay for liability insurance.
  • History of claims. If you have filed general liability claims in the past, this may increase your premiums.
  • Policy details. Coverage limits, deductibles and other policy details affect the cost of your business insurance.

Cost of Commercial Property Insurance

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. That’s for a standard coverage limit of $60,000 with a $1,000 deductible.

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

What factors affect commercial property insurance costs?

Several factors can affect commercial property insurance costs:

  • location. Operating in a high-risk area prone to natural disasters can increase premiums.
  • Age and size of construction. Insuring older or larger buildings will cost more than insuring smaller or newer buildings.
  • Types of fire protection. Having a sprinkler system, fire alarms and easy access to a fire extinguisher can lower the price 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 have expensive equipment.
  • Types of risks covered. Similar to home insurance, you’ll pay more if you need to cover additional risks to your business, such as floods, earthquakes or employee theft.

Cost of Business Interruption Insurance

If your business has to close temporarily due to a loss covered by your policy, business interruption insurance helps to replace your loss of income and pay operating expenses during that time. This includes lost income, mortgage, rent or lease payments, loan payments, taxes, payroll, relocation costs and training costs.

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 business interruption insurance costs?

Three main factors will affect business interruption insurance costs:

  • Income. Since business interruption insurance covers lost revenue, the higher the company’s revenue, the higher the insurance premium will be to cover it.
  • 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 property. In general, the higher the value of your commercial property, the more you will pay for business interruption insurance.

Cost of Inland Marine Insurance

Inland marine insurance protects your business if something happens to your property or products in transit. This may include goods that are delivered to or from your business, or property that is used for business 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 a $5,000 coverage limit is the most popular choice among its 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 inland marine insurance costs?

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 a business 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 cyber attack, 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 as much as $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 more for cyber insurance. Companies in transportation and logistics, administrative services, manufacturing, auto dealerships, and the construction industry pay the least.

What Factors Affect Cyber ​​Liability Insurance Costs?

There are several key factors that affect cyber insurance costs:

  • 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 costs. The higher your income, expenses and operating costs, the more you can expect to pay for cyber insurance.
  • Your network security. Strong network security practices, or the lack thereof, affect your risk of cyber claims.
  • The number of people who have access to your systems and data. More access rights can mean more risk, resulting in higher premiums.
  • Your claims history. Past cyber insurance claims can affect future cyber insurance premiums.

The cost of workers’ compensation insurance

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 a month or $840 a year for businesses with less than $300,000 in payroll costs, according to The Hartford.

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

What Factors Affect the Costs of Workers’ Compensation Insurance?

Three main factors affect costs for workers:

  • Payroll size. The larger your company and the larger the size of the payroll, the more you can expect to pay for workers’ compensation insurance.
  • Job duties of employees. Expect to pay more for employees who have more dangerous job duties. For example, workers compare costs for office jobs will be lower than practical jobs 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 purchase state-funded workers. You have no other options. But in other states, you can buy workers’ comps on the private market.

For the six policy types above, expect to pay about $340.75 per month in total, or $4,090 per year, on average.

How to lower your business insurance costs

Business insurance is an important way to protect a company from costly damages. It 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). A BOP bundles three essential types of coverage: general liability insurance, commercial property insurance, and business interruption insurance. It is usually cheaper to buy one BOP than three separate policies.

Here are some other tips to reduce business insurance costs:

  • Shop and compare quotes from multiple insurance companies.
  • Package 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’ll pay to file a claim.
  • Avoid risks that could lead to a claim.

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