How Much Does Small Business Insurance Cost?

Cost is an important consideration when choosing an insurance company, but the cheapest option may not be the best fit for you. Companies’ ratings and customer reviews vary, some provide more digital tools than others, and some policies may have gaps in coverage while others come with needed endorsements. It’s important to consider all these factors when comparing business insurance quotes. 

Factors Influencing Cost

Industry or Profession

How much business insurance costs is based on the level of risk your business presents. For example, a construction company or restaurant will have many more liability risks than a retail store or office. Businesses that use expensive equipment will have higher commercial property costs, and businesses that own and operate vehicles will have additional commercial auto costs. Your business income will also impact the cost of business insurance and whether you qualify for a small business owner’s policy.  

Business Location

Some locations expose businesses to greater risks than others. If your business is in an area prone to natural disasters or high crime rates, you’ll likely pay more for commercial property insurance than if your business was in a low-risk area. Your cost will also depend on whether you rent or own your space as well as its size. State regulations, such as workers’ compensation insurance requirements, can also impact your costs. 

Claims History

Business insurers check your prior claims history to identify trends that may indicate your business is high-risk. If you’ve battled frequent lawsuits, your insurance company may charge you a higher premium because it may assume your business isn’t taking the right precautions to avoid risk. 

Number of Employees and Customers

If your business has employees, you’ll likely need workers’ compensation insurance. The cost will be based on the number of workers your business employs. Business insurance companies also look at your annual revenue when determining your premiums, since serving a large customer base and handling a high volume of inventory inherently exposes your business to more liability and property risks. 

Coverage Needs

When purchasing a business insurance policy, you’ll select the coverage options your business needs, add any necessary endorsements, choose your annual coverage limits, and choose your deductible. Choosing higher annual aggregate liability limits will increase your premiums, as will choosing a $0 deductible for your property insurance. 

Types of Business Insurance

• General liability insurance: General liability insurance overs legal fees and judgments for lawsuits related to bodily injury, personal and advertising injury, and property damage as a result of non-professional negligence 
• Commercial property insurance: Covers rebuilding, repair, or replacement of buildings and their contents and equipment after a covered peril, like a fire or vandalism
• Business interruption insurance: Helps pay for ongoing expenses and debts as well as replace lost business income after a covered event, like a windstorm
• Business owner’s policy: A business owner’s policy is a package of coverages that includes general liability insurance, commercial property insurance, and business interruption insurance
• Professional liability insurance: A professional liability policy covers legal fees and judgments from lawsuits brought by customers claiming professional negligence, such as inaccurate advice or misrepresentation
• Workers’ compensation insurance: Required in most states for businesses with a certain number of employees, workers’ compensation insurance pays for medical bills and lost wages if an employee is injured or becomes ill while working. It typically also protects the business from employee lawsuits related to the injury. 
• Commercial auto insurance: Commercial auto insurance covers medical bills and repairs to property for the other party in an accident, and can also pay for injuries to the driver and physical damage to the vehicle owned by the business
• Hired and non-owned vehicle insurance: Works like commercial auto insurance, except that it covers personal or rented vehicles operated for business purposes
• Inland marine insurance: Covers inventory and equipment you transport to job sites or ship to customers
• Cyber liability insurance: Cyber liability insurance covers liabilities, recovery of reputation and lost data, lost business income, and other consequences of a cyber breach

How To Save Money on Business Insurance

1. Compare quotes: Some insurance providers may offer the coverage you need for less than others. So it’s important to compare business insurance quotes on a site like Tivly before choosing a company. However, bear in mind that price isn’t the only consideration. Make sure the company has good financial strength and customer satisfaction ratings.  
2. Bundle your coverages: Many insurers offer bundling discounts when you buy two or more policies. You can also save by buying pre-packaged coverages, like the business owner’s policy. 
3. Opt for a higher deductible: The deductible you choose represents your share of the financial responsibility for a claim. Choosing a higher deductible means you’ll have greater out-of-pocket expenses if a loss occurs, but it can save you money on your monthly premiums. 
4. Be proactive about preventing losses: Since your claims history can affect your premiums, you should take steps to limit your risk. Your insurance company will likely have resources available and may even provide training to help your business prevent costly incidents. 
5. Update your coverage as needed: Keep your insurance company informed about changes to your business. If you expand your service area, hire more employees, or acquire another entity, you’ll likely need to add more coverage to protect your business. If you need to lay off employees or close down a location, you should also update your coverage to save money on your premiums.