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 small business insurance?

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

General liability coverage is often bundled with commercial property insurance at a discount in a package called business owner's policy (BOP). Many small business owners buy a BOP because it protects their bottom line from any damage or loss of their business property. The average cost of a business owner's policy 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 from leading insurance companies. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

Average monthly small business insurance costs

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Understanding small business insurance cost factors

Your insurance provider will typically calculate your insurance premium based on several different factors about your business. This includes:

  • Your policy limits and deductible
  • Industry and risk factors
  • Location of your business
  • Number of employees
  • Annual revenue
  • Claims history

However, the business factors that impact your cost can vary depending on the types of coverage that your business needs.

You can start a free application or chat with a licensed insurance agent to learn more about which insurance policies are right for your small business.

What are policy limits and how do they affect 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.

General liability insurance is an occurrence-based policy. It pays for losses that occur during the policy period and has 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.

The limits can range from $250,000 to $2 million and more. Most Insureon customers choose $1 million / $2 million general liability insurance limits.

Professional liability or errors and omissions insurance policies are claims-made and only cover claims filed while your insurance is active.

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 insurance 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.

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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 for insurance companies. 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 insurance policies and costs for your industry:

How does your location affect business insurance costs?

Your location can also influence the cost of business 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 workers' compensation insurance for businesses with employees. 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, your industry, and your location aren't the only factors that affect the cost of small business 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.
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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!

How is the cost of small business insurance calculated?

To estimate your own cost of business insurance coverage, you might start with the cost of general liability insurance since most small business owners buy this policy.

The size of your business, its location, and the type of work you do are all key factors in determining your premium rate. The average monthly premiums, listed above, can give you a general idea of how much you could pay for coverage.

Your class codes

The insurance agent will start with your general liability class codes. These codes group similar businesses together to give the insurance company an idea of the types of risks your business faces.

For example, construction businesses face higher risks of injuries and property damage claims. Professional services and consultants are considered less risky for general liability claims.

Location and condition of business property

The location and condition of your property will also be important factors. An area at risk of crime or similar hazards would increase your premiums on a number of policies. You’d also face higher insurance costs if you’re in an area with expensive real estate, as it could increase your cost of claims. Keeping your business property well maintained can reduce your risk of a claim, which helps you avoid a premium increase.

Payroll and revenue

Your business size and annual revenue can be an important factor in setting your premiums, although this also depends on your business. For example, a financial or accounting firm might see an increase in revenue by landing a large customer. This would have less of an impact on its general liability insurance cost than a manufacturer that expanded its factory and hired more people.

Your experience and claims history

The longevity and financial stability of your business will be noted by the insurance company in setting your premiums, as more experience within your industry can often mean less risk. Insurers will also look at any claims history you may have, as a guide to its cost of insuring your business.

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Who is the average Insureon customer?

Insureon is a resource for a wide range of small business owners. We have helped everyone from technology 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 small business customers have:

  • One to four 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 business 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 freelancers. Another 29% of businesses have two to four employees, and others employ five or more.

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

Business 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 small business insurance with Insureon?

Insureon partners with top-rated U.S. insurance companies 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, and get free insurance quotes from top carriers in the U.S.

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.

Obtén más información sobre precios de seguros para negocios (en español).

Updated: April 3, 2024
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How are general liability insurance premiums calculated?How are professional liability insurance premiums calculated?How are workers' comp insurance premiums calculated?How can I find cheap workers' comp insurance?Types of business insurance: What do I need?