Small Business Insurance Costs
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How much does small business insurance cost?

Small business owners can get a good idea of the cost of business insurance by looking at pricing data from the thousands of businesses that found policies with Insureon.

What is the average cost of insurance for small businesses?

The first policy that most business owners need – and also the least expensive one – is general liability insurance. In an analysis of 30,000 small business owners who purchased commercial insurance from Insureon, the average cost of general liability insurance is $42 per month or $500 per year.

A business owner's policy (BOP) bundles general liability coverage with commercial property coverage at a discount. The average cost of a business owner's policy (BOP) is $57 per month or $684 annually.

The table below shows average monthly costs for common small business insurance policies. Our figures are sourced from the median cost of policies purchased by Insureon customers. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

Average monthly costs of small business insurance

See details about small business insurance costs for other common policies:

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Understanding small business insurance cost factors

How do policy limits affect small business insurance costs?

If you want car insurance that pays for a wide range of damage, you have to pay more for it. The same rule applies to business insurance. If you want a policy that covers more expensive accidents and lawsuits, expect to pay more than you would for basic coverage.

The limits on small business insurance coverage range from $250,000 to $2 million and more. Most policies have two limits:

  • Per-occurrence limit. While the policy is active, the insurer will pay up to this amount to cover any single claim.
  • Aggregate limit. During the lifetime of the policy (usually one year), the insurer will pay up to this amount to cover claims.

As an example, most Insureon customers choose a general liability policy with $1 million / $2 million limits.

When buying a policy, it's a good idea to make sure the deductible is something you can easily afford. If you can’t pay for it in a crisis, your insurance won’t activate to cover your liability claim. The average deductible that Insureon customers select for general liability insurance is $500.

The right amount of coverage depends on your business needs. You want coverage that'll cover a potential lawsuit, without buying more than you need. Chat with a licensed insurance agent if you're unsure which limits are right for your business.

How does your industry affect the cost of business insurance?

When deciding how much to charge for a policy, your industry is a top consideration. Insurers take into account any risks that might increase the chance of an expensive claim, such as hazardous machinery that could injure workers, or a greater likelihood of malpractice lawsuits.

Higher risks mean greater odds that you'll file a claim, which means higher premiums for insurance.

For example, general liability insurance covers third-party bodily injuries and property damage, so professionals who engage with the public typically pay more for this policy. That means general liability insurance costs are higher for retailers, but lower for consultants who work on their own.

Similarly, commercial auto insurance costs depend on the type of driving you do, and professional liability insurance costs depend on the type of advice or professional services you provide. If other businesses like yours have a history of claims, that means increased costs for your business too.

You might also run into insurance requirements for your industry. For example, businesses in the construction and cannabis industries are often required to carry general liability insurance.

Learn more about recommended policies and costs for your industry:

How does your location affect business insurance costs?

Your location can also influence the cost of insurance. For example, businesses in an area with high crime or increased foot traffic may pay more for insurance that covers theft or customer accidents.

State laws also play a role. Most states require businesses with employees to carry workers' comp insurance. The majority of states also require commercial auto insurance for business-owned vehicles.

Finally, you may need a certain policy to work in a specific location. For example, businesses in real estate, insurance, or healthcare may need professional liability insurance (also called errors and omissions insurance) in order to get licensed in their state or work in a specific setting like a hospital.

What other factors affect business insurance costs?

The amount of coverage you choose and your industry aren't the only factors that affect the cost of insurance. Insurers will also look at:

  • Business property. The premiums of policies that cover property damage and theft primarily depend on the value of the insured property.
  • Business revenue. In general, businesses with higher revenue incur more risks and pay more for insurance.
  • Number of employees. With more employees comes a higher risk of employee accidents.
  • Types of business insurance purchased. Different policies come with different costs, with general liability insurance being the most affordable policy.
  • Claims history. A history of claims will drive up your insurance rates, which is why risk management is essential.

How can you get affordable business insurance?

Fortunately, there are quite a few ways to save money on business insurance:

Save a bundle with a business owner's policy

The most common bundle is a business owner's policy, which includes general liability insurance and commercial property insurance. The average cost of business owner's policy is only $57 per month for Insureon's small business customers.

View video transcript.

Bundle up. A business owner's policy includes both general liability and commercial property insurance.

It costs about $57 per month, less expensive than if these policies were purchased separately.

Don't put your business at risk. Apply for your policy today. Oh-oh!

Who is the average Insureon customer?

Insureon is a resource for a wide range of small business owners. We have helped everyone from IT / tech businesses to house cleaners, management consultants, and restaurants with their business insurance needs.

To understand how your business compares, it's helpful to get an idea of who we insure. The majority of our customers have:

  • 1 to 4 employees
  • Annual revenue ranging from less than $50,000 to more than $200,000
  • Five years or less in business

Most businesses have only one employee

The number of employees can impact your insurance costs, especially for policies like workers' compensation insurance.

The majority of small businesses in this analysis (57%) have only one employee. That means most of our customers are sole proprietors, independent contractors, and similar business owners. Another 29% of businesses have two to four employees.

Number of employees for Insureon small business customers.

53% of businesses earn less than $100,000 annually

Your revenue also impacts the cost of small business insurance. For example, a small business that earns less than $1 million in annual revenue may be eligible for a cost-saving business owner's policy.

The average revenue of the small businesses included in this analysis is $80,000. The majority of customers (53%) have less than $100,000 in annual revenue.

Distribution of small business revenue for Insureon customers.

Most companies were in business for five years or less

Insurance premiums may be lower for companies that have been in business for many years without making a claim.

The majority of companies included in this analysis (69%) have been in business for five years or less.

Years in business for Insureon small business customers.

How do you buy insurance with Insureon?

Insureon partners with top-rated U.S. providers to find the right coverage for your small business. To get started, fill out our easy online application with basic information about your business, such as revenue and number of employees.

You can consult with a licensed insurance agent at any point in the process. Compare quotes and choose the coverage that fits your business needs and your budget. Once you pay for your policy, you can download a certificate of insurance to show clients and others that your business is protected.

Updated: May 18, 2023
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