How Much Does a Small Business Insurance Cost?

For some, having the chance to run their own business is equivalent to fulfilling their dreams, the chance to live and work doing what they love. They turn their passion and skills into a small business and offer either products or services to generate income.

But, no matter how important and dedicated an individual may be about his business, there are always threats to its stability. In fact, running a business is always a risk.

But if you’re a small business owner, there’s always a way to lessen or maybe even eliminate the risks that come with running a business. And that’s through insurance. To understand more, Amazon offers a book on insurance concepts and coverage.

business insurance protection cover

Average Cost of Small Business Insurance

Before anything else, let’s define what a small business is. In the United States, the Small Business Administration (SBA) states that small businesses are determined through the average number of employees over the past 12 months or the average annual receipts over the past three years. And the common restrictions for most industries are 500 employees and annual revenue that is under $7.5 million.

Now, if you fit those descriptions, it might be the time you protect yourself and your business by getting insured. See, there are over 100 million cases of lawsuits filed in the US state courts each year. And according to a survey by Public Opinion Strategies and Penn Schoen Berland, 43% of small businesses are threatened or have been involved in a civil lawsuit. And even when you’re at right and the case against you is invalid, getting sued is never cheap.

Therefore, it is essential that your small business has an adequate insurance protection. Now to do that, consider getting multiple policies instead of just one.Well, here are the eight most important types of insurance every small business should have plus its average prices:

  • General Liability Insurance: Also known as Business Liability Insurance and Commercial Liability Insurance, this type of insurance protects you and your business from claims which involve physical injuries and property damage that are caused by your products, services, or operations. It covers legal defense, settlements, judgments, and claims of libel, slander or copyright infringement. And it can cost around $200 to as much as $3,000.
  • Professional Liability Insurance: Known as Errors & Omissions Insurance, a Professional Liability Insurance is a policy to protect businesses who earn through expertise or services. It covers the attorney’s fees, court costs, settlements, and judgments. Now the difference of this from a General Liability is, a Professional Liability Insurance protects you from your own mistakes – mistakes where without it, could be costly. It is from $270 to $3,000.
  • Property Insurance: Or Commercial Property Insurance is a type of insurance needed to protect your property and assets against theft, losses, and accidents. It covers replacements or repairs for the property. In some cases, it also compensates you for items that cannot be replaced. And this type of policy often cost $300 to $1,200.
  • Workers’ Compensation Insurance: If you have people working for you, whether you have one, two or 10 employees, then you must have a Workers’ Compensation Insurance. It is mandatory and each state has its own laws and regulations on such. This is to provide your employees’ benefits like payment for medical treatment, death benefits, and temporary and permanent disability. And the expense will be from $230 to $3,500, depending on how many employees you have.
  • Product Liability Insurance: If your business entails offering products to your customers then it’s essential to have a Product Liability Insurance to protect your business against claims of injury, damage, or any potential problems that may arise from your product. Cost for this kind of policy is less than $2,500. But for riskier products, like medical equipment, it could even reach more than $7,000.
  • Vehicle Insurance: Also called Commercial Auto Insurance, a Vehicle Insurance is necessary for businesses which require cars, trucks, and vans in their operations. It is a policy that covers physical damage, liability, medical payments on a variety of vehicles. It also includes coverage for employees driving the vehicle and the equipment it carries. All this for around $160 to $2,300.
  • Business Interruption Insurance: Having this type of coverage will ensure the income losses you might suffer in your business in case a disaster happens. It will help protect your lost earnings if you cannot operate. Furthermore, after a disaster, this policy will help you pay any additional expenses to keep operations going. And the national average cost of this policy is around $1,200.
  • Cyber Liability Insurance: In today’s time, companies and small businesses like yours tend to store important information on computers or the internet. And by doing so, making the business vulnerable to cybercriminals. By having a Cyber Liability Insurance, you will be able to survive data breaches and cyber-attacks. This policy will pay for recovery expenses, customer notification, monitoring, legal fees and fines. And it will cost you $750 to $1,200.

Now, you don’t have to add each policy to arrive at a total. Most providers bundle them all together to give you a cheaper alternative.

To give you an idea, BizInsure, which works together with top insurance companies, offers a Business Owner’s Policy (BOP). It is a convenient policy package that combines General Liability with coverage for property, inventory and your owned building. It may also include coverage for non-owned and hired automobiles, business interruption, employee dishonesty, and much more. And price for such starts at $504.

Shopping for Small Business Insurance

There are tons of companies and agencies offering insurances for small businesses. They all have something good to offer and you just have to choose the one that fits your needs most. To give you examples, here are some insurance providers that can help you find what you’re looking for:

  • Hiscox– Hiscox offers one of the most competitive prices as far as small businesses are concerned. Their price goes for as low as $22.50 a month or an annual cost of $270.
  • Insureon – Making it easy for small businesses, freelancers, and independent contractors to find a commercial insurance fit for their needs, Insureon is the perfect place to compare prices and coverage. You can find General Liability Insurance prices starting at $428 to $741 a year and Professional Liability Insurance for $600 to $1,736.
  • InsuranceTrak – Working together with multiple insurance carriers, InsuranceTrak is an independent agency that offers coverage for general liability at $300 to $400, property for $742, and a business owner’s policy for $430 to $572.
  • TechInsurance – The leading online agent for IT freelancers and small businesses, you can try TechInsurance for your coverage needs. They work together with respected insurance providers and can provide you with fast quotes. To give you an idea of their prices, their general liability cost around $483 to $2,758, workers compensation for $641 to $2,441, and professional liability for $960 to $3,000.
  • Trusted Choice – Made up of independent insurance agents as well, Trusted Choice can offer you the best deals from different companies at highly competitive prices. Through Trusted Choice, you are able to get a personally tailored plan to fit your needs and budget. Their general liability goes for $300 to $3,000, professional liability for $1,000 to $3,000 and property insurance for $500.
  • State Farm – A top insurance company, State Farm offers small business insurance like Business Owners Policy, Business Auto Insurance, Business and Professional Liability Insurance, and Surety & Fidelity Bonds.

Factors That Matters

Now, what you will have to pay will depend on a number of factors such as:

Types of policy. Each type of policy is different and will have to cover different aspects in your business. Usually, general liability costs the least while worker’s compensation has the highest cost.

Size of business. The physical structure, as well as employees and annual revenue, are factors which can determine the size of your business. And normally, the smaller your company is, the lower insurance cost you’ll have to pay. For example, the size of the building you’re operating at will affect. 

Your industry. Your profession or the industry you are in is a big factor in determining how expensive you’ll have to pay for your small business. Jobs or companies with more risks will mean higher rates.

Geographic location. The place where you set up your shop or business will hugely affect the cost of your insurance. For example, if the location you’re at is prone to flooding then you’re property insurance would be higher.

Revenue. Generally, the more you make the higher insurance cost you’ll be given and the higher amount of settlement you’ll have to pay in case you get sued.

Risk Management Procedures. Good risk management strategies could lower the premium as this puts your business at lower risk for mistakes. For example, you perform training sessions, or enact safety procedures, and be extremely keen on work experiences when hiring new employees then you’ll arrive at a lower premium.

Past claims. Business owners will pay more if they have filed several claims in the past.

Number of employees

Also, it is worth noting how essential it is that you find an insurance agent who will work with you to provide the best possible coverage at the best price and at your advantage

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