Before we get to the answers to how much business insurance costs, think about how much it would cost if you didn’t have insurance.
There are benefits to business insurance that far outweigh the costs. And cost factors vary with the types of business insurance you need.
Let’s provide details on the types and costs of small business insurance.
How Much is Business Insurance
Choosing the right type of insurance is an important part of the process. Start by making a list of your risk exposures.
Do customers frequent your place of business? Does most of your business happen online? Do you work outside your home? Do you need auto insurance? Do you have employees?
Every business situation is different. Let’s look at the basics:
Cost of Professional Liability Insurance
Liability insurance is also called Errors and Omissions. This type of small business insurance is needed by owners who provide professional services, such as accountants, nutritionists, financial advisors, lawyers, and more.
Average monthly cost: $50
General Liability Insurance Costs
You need general liability insurance if you have products. Someone could be injured by your product, or your product could cause personal or property damage. The cost of a general loan can vary depending on the policy limits of how much money you need.
Your general liability insurance will also cover you if a client or customer sustains a personal injury at your place of business during normal business operations.
Average monthly cost: $50
Cost of Workers’ Compensation Insurance
If you have employees, worker’s compensation insurance is a legally required business insurance policy regardless of how many employees you have, one or 50. It’s an unavoidable small business insurance expense. If you have employees, they can get injured on the job. Workers Comp insurance will pay you if an employee is physically injured and has claims related to medical expenses.
Average monthly cost: $78 per month, or $900 per employee.
Commercial Property Insurance Costs
People who run a home business often overlook real estate insurance. Most basic homeowner’s insurance policies do not cover the cost of certain business equipment you have at home, such as computers, software, and production equipment.
If you own or lease your business premises, commercial premises insurance will cover you for business equipment, as well as stored goods/products. Coverage includes physical damage to the original structure. Costs vary depending on the type of business. For example, insurance rates for a specialty paint manufacturer will be different than the average annual premium cost for a clothing manufacturer.
In addition to working with hazardous materials (such as flammable paints and glues), there are other factors that can determine whether or not your business has a high operational risk.
Average monthly expenses: $100 to $2,000.
BOP Business Owners Policy
With a business owner policy, you can include general liability insurance, liability insurance, and commercial property insurance. Increasingly, the insurance company can include more coverage by allowing you to add online liability insurance to provide more comprehensive coverage.
The standard price of a BOP is less than the sum of the policies when taken individually from the insurance provider.
Average monthly expenses: $300 to $3,500
Read More: Best small business insurance companies
Cost of Cyber Liability Insurance
If you are a small business owner who runs any part of your business electronically, you need this type of insurance. If you have a data breach, you can expose customer information – such as payment information, addresses and phone numbers, etc. – on the web.
Cyber liability coverage includes the cost of data recovery and restoring your system. It will also help you pay legal costs if you are sued for a data breach.
Average monthly cost: $145
Umbrella Insurance Costs
In addition to a BOP, an insurance company may offer a CPO, or Commercial Property Owner’s policy. Small business owners with fleets choose this type.
A CPO will include Commercial Property Insurance but also allow you to have an “umbrella” of commercial auto insurance. There are many factors that affect how much the annual premium will be – such as the number of cars, the use of the cars, and the size of the vehicles (for example, a van or a tractor-trailer).
Average cost: $1,000 to $3,000 per year for an estimate of $1 million; small businesses can expect to pay about $700 a year.
Commercial Vehicle Insurance Costs
Do you use your personal car for your business? In other words, is the family van used to deliver candles or cakes, etc?
You should track your mileage, just like business expenses. You will need to determine how much of your annual mileage is personal, and how much is commercial, to determine whether or not you need a commercial auto policy.
If you don’t own a commercial vehicle and have a business-related accident, you may have some explaining to do.
Average monthly cost: $140, depending on the type of vehicle.
Disability Insurance
Often overlooked, getting disability insurance can be one of the smartest financial decisions you’ll make. Some of your business expenses will be covered if you are injured or sick. This is an important insurance for someone who may be seriously injured on the job, such as contractors, landscapers, etc.
Annual expenses are usually 4% of your salary.
Accident Insurance
This is another insurance policy that is often overlooked. Commercial property policies (and homeowner’s policies) generally do not include coverage for natural disasters such as hurricanes and earthquakes.
Also, commercial property insurance may not cover the exterior of your business, such as signs and landscaping. Hazard Insurance picks up that slack.
Average monthly expenses: $60-$200
Factors Affecting Small Business Insurance Costs
Here are some factors that affect the cost of small business insurance:
- Business Goods
- Number of Employees
- Claims History
- Professional Services provided
- Geography/Location
- Number of Years in Business
- Type of Business
- The Need for Auto Insurance
- Domestic or virtual environment
- Types of integration required
How to Reduce the Cost of Small Business Insurance Premiums
Many business owners are already aware of ways to save money on business insurance. And that leads us to our first tip on how to cut costs.
- Seek expert advice from other small business owners
- Group policies under one umbrella
- Take steps to reduce the risk
- Save by adding security measures like alarm systems and updated software.
Choosing the Right Insurance Company for Your Business
Although many insurance providers offer free estimates, your time is not free. You may spend hours researching different insurance companies.
Try narrowing down your search by:
- List the types of business insurance you need.
- Networking with other small business owners.
- Working with an independent insurance agent or insurance company with experience in small business insurance, who can go through the decisions and reports for you.
Photo: Depositphotos
