Put another way, the majority of Insureon customers (60 percent) have revenue of $100,000 or less per year. The remaining 40 percent earn more than $100,000 annually.
How Much Does Small Business Insurance Cost?
Without taking into account the industry, business size, or policy purchased, we found that the average cost of a small business insurance policy is $1,281, up from $725.33 in 2014. The median cost increased only modestly, from $500 to $584.
That's good news for most business owners, because it shows that most businesses are still seeing yearly policy costs well under the thousand-dollar mark.
Average and Median Cost by Policy
Of course, those numbers only offer a broad overview. Many factors affect the price of small business insurance, including…
- Type of policy a business purchases. For example, General Liability Insurance is one of the least expensive kinds of coverage we sell, with a median annual cost of just $428. By contrast, the median price for an Umbrella Insurance policy is higher: $960.
- Limit. When you buy a policy, you decide how much coverage you want, and it's priced accordingly. For example, for a Professional Liability Insurance policy with a $250,000 limit, the average cost is $506. For a $1 million limit, the average cost is $1,316. Check out our Professional Liability Insurance Cost Analysis page to learn more.
- Deductible. Just like medical insurance or car insurance, lower deductibles for business insurance mean higher policy costs. If you choose a higher-deductible policy, the policy cost will typically decrease.
- Size of the business. The dimensions of the physical structure where your business is located, as well as the size of the lot, will impact costs for certain policies, such as General Liability Insurance and Property Insurance.
- Industry. If you own a low-risk business, such as an accounting firm, your premiums may be lower than, say, a construction company, where the potential risk is higher.
- Location. Your business's physical location can have a significant impact on your premium. For example, if your business is located in Butte, Montana, your business insurance costs may be lower than a similar business located in Los Angeles, California.
- Revenue. Generally speaking, the more you have to protect, the higher your premium will be. So if your business earns less than $25,000 annually, your rates may be lower than a business that pulls in more than $500,000.
- Number of employees. Your employees impact Workers' Compensation Insurance, Professional Liability Insurance, and General Liability Insurance rates. The more people you employ, the higher your insurance costs may be.
In some cases, the cost of coverage can even depend on the number of policies a business owner buys. That's because of the magic of bundling. Just like the discounts available when you bundle cable and Internet together, many insurance providers offer price breaks when small-business owners buy multiple policies at the same time. (Learn more about the most popular way to bundle insurance for small businesses on our page about the Business Owner's Policy, or BOP, which bundles General Liability and Property Insurance.)
How Policy Type Affects Cost
As we mentioned above, the kind of insurance you buy affects how much you pay. No surprise there: umbrellas, tents, and roofs all come with vastly different price tags. They also offer significantly different types of protection. Business insurance works the same way. Each policy provides coverage for different types of risks, and its price reflects those differences.
As we mentioned earlier, General Liability Insurance is one of the least expensive kinds of coverage we sell, with a median annual cost of just $428. Employment Practices Liability Insurance (EPLI), on the other hand, is one of the most expensive policies we offer, with a median annual cost of $2,495.
Why the difference? Because General Liability covers businesses for incidents like slip-and-fall injuries, which tend to be fairly straightforward and so have relatively low price tags. EPLI, on the other hand, covers businesses for employee-related issues of discrimination. These cases are often complex and require far more work from lawyers, which makes them much more expensive to resolve.
Dig Deeper into Insurance Costs
Insurance costs vary greatly based on the type of insurance a business buys. Learn more about how much each of these insurance policies costs for small businesses.
- General Liability Insurance Cost Analysis. General Liability is hands-down the most popular policy we sell. It's the first policy most businesses buy. If you're not sure what kind of insurance you need, it's a good idea to start here.
- Professional Liability Insurance Cost Analysis. Essential for any business that offers advice or sells services rather than goods, Professional Liability Insurance (also called Errors & Omissions) is at the center of many small business risk management plans.
- Umbrella Insurance Cost Analysis. A handy and budget-friendly policy, Umbrella Insurance supplements the coverage offered by certain existing liability insurance policies. In some cases, businesses can substantially increase the insurance protection available to them for a relatively low price.
- Workers' Compensation Insurance Cost Analysis. Most small businesses in America have only one employee (the owner), which means they probably don't need Workers' Comp Insurance. Businesses that do have employees, though, are almost always required by state law to carry this coverage.
Industry-Specific Sample Quotes and Cost Estimates