How much does small business insurance cost – Forbes Advisor

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Small business insurance costs between about $14 and $124 per month, depending on the types you buy — general liability, commercial property, business interruption, inland waterway, cyber liability, and/or workers’ compensation. If you bought all of these types of coverage, you would probably pay around $340 a month.

Here’s a rundown of how those costs break down and what factors most influence rates when you’re looking for the best small business insurance.

Business insurance costs at a glance

Cost of general liability insurance

General liability insurance protects you from lawsuits or claims if someone is injured on your property or you are responsible for damaging someone else’s property. It typically costs around $30 a month, according to a recent Hiscox study. The study also found that 95% of business owners pay less than $50 per month and only 1% pay more than $100.

What factors influence general liability insurance premiums?

These four factors have the greatest impact on general liability insurance premiums:

  • building size. Larger buildings offer more opportunities for accidents. So if you work in a larger establishment with more walk-in customers, you could pay more.
  • location. Businesses that operate in high-risk areas with higher crime rates may pay more for liability insurance.
  • Amount of payroll and annual turnover. The higher your expenses or operating costs, the more you will have to pay for liability insurance.
  • claim history. If you have made general liability claims in the past, this could increase your premiums.
  • Policy Details. Coverage limits, deductibles, and other policy details affect your insurance costs for your business.

Commercial property insurance costs

Commercial property insurance protects your business from losses in the event of a fire, natural disaster, theft, or other problems.

The average cost of commercial property insurance is $63 per year, according to Insureon. This applies to a standard coverage limit of $60,000 with a $1,000 deductible.

Insureon found that nearly half (42%) of business owners pay between $46.67 and $83.33 per month for commercial property insurance, while 16% pay less than $46.67.

What factors affect the cost of commercial property insurance?

Several factors can affect the cost of commercial property insurance:

  • location. Operating in a high-risk area prone to natural disasters can increase premiums.
  • age and size of the building. Insuring older or larger buildings costs more than insuring smaller or newer buildings.
  • Types of fire protection. A sprinkler system, fire alarms, and easy access to a fire department can lower the price of your premiums.
  • equipment costs. Commercial property insurance reimburses you for lost or damaged items on your property. So expect more when accommodating expensive equipment.
  • Types of hazards covered. Similar to home insurance, you’ll pay more if you need to cover additional risks to your business, such as: B. Floods, earthquakes or employee theft.

Business interruption insurance costs

If your business has to be temporarily closed due to damage covered by your policy, business interruption insurance will help replace your lost income and pay for operating costs during that time. This includes lost income, mortgage, lease or rent payments, loan payments, taxes, payroll, moving expenses, and training expenses.

The average cost of business interruption insurance ranges from $40 to $130 per month, or $500 to $1,500 per year, according to Insureon.

What factors affect the cost of business interruption insurance?

Three main factors influence the cost of business interruption insurance:

  • revenue. Because business interruption insurance covers lost revenue, the higher the company’s revenue, the higher the insurance premium.
  • Industry. Industries like restaurants are more likely to suffer property damage and pay a higher premium for business interruption insurance.
  • The real estate value of your company. In general, the higher the value of your commercial property, the more you pay for business interruption insurance.

Inland navigation insurance costs

Inland shipping insurance protects your business if something happens to your property or products during transit. This may include goods shipped to or from your business or property used for work purposes (e.g. lawn mowers or camera equipment).

The average cost of inland waterway insurance is $14 per month or $169 per year, according to Insureon. This applies to a coverage limit of $5,000.

Insureon found that a coverage limit of $5,000 is the most popular choice among its customers in the landscaping, cleaning, plumbing and construction industries.

In comparison, photographers and videographers typically choose a policy limit of $86,000 (with an average annual premium of $580), while architects and engineers purchase higher coverage limits.

What factors influence the cost of inland navigation insurance?

There is one main factor affecting inland navigation insurance: equipment or product costs. Small business owners who need to transport expensive equipment or products face higher premiums.

Cost of cyber liability insurance

Cyber ​​liability insurance protects a company from financial damage that can result from a cyber attack. This type of insurance can cover the cost of repairing or rebuilding your business after a cyber attack, as well as legal and settlement fees.

The average cost of cyber liability insurance is $123.75 per month, or $1,485 per year, according to AdvisorSmith. But businesses can pay as little as $650 a year or as much as $2,357, depending on the industry.

For example, AdvisorSmith found that payment processing, financial services, securities services, legal, and insurance companies pay the most for cyber insurance. Companies from the transport and logistics, administration, manufacturing, car dealership and construction sectors pay the least.

What factors influence the cost of cyber liability insurance?

There are several main factors that affect the cost of cyber insurance:

  • Industry. Businesses that are more exposed to cyber risks may need policies with higher coverage levels and therefore higher premiums.
  • Sales and costs of your company. The higher your income, expenses and operating costs, the more you can pay for cyber insurance.
  • your network security. Strong network security practices, or lack thereof, impact your exposure to cyber claims.
  • The number of people who have access to your systems and data. More access rights can mean higher risk, which leads to higher rewards.
  • your claims history. Past cyber insurance claims may impact future cyber insurance premiums.

Cost of worker’s compensation insurance

Workers’ Compensation Insurance is a type of insurance that helps workers who are injured while on the job. The insurance company will usually help pay for medical expenses and lost wages, among other things.

According to The Hartford, the average cost of disability insurance is $70 a month, or $840 a year for businesses with less than $300,000 in payroll costs.

In most states, you are legally required to have workers’ compensation if you have at least one employee. But employee comp laws vary from state to state. For example, it is not required if you have fewer than five employees in Alabama or fewer than three employees in Arkansas. Disability insurance is not required in Texas or Wyoming.

What Factors Affect the Cost of Workers’ Compensation Insurance?

Three main factors affect the cost to workers:

  • wage size. The bigger your business and the bigger your paycheck, the more you’ll have to pay for workers’ compensation insurance.
  • duties of the employee. Expect to pay more for employees who have riskier work assignments. For example, clerical jobs will have lower career costs than hands-on jobs like construction or mechanics.
  • location. If you live in a monopolistic state like North Dakota, Ohio, Wyoming, or Washington, you are legally required to buy state-funded worker compensation. You have no other options. But in other states, you can look to the private market for employee comp offers.

For all six types of policies above, expect to total around $340.75 per month, or an average of $4,090 per year.

How to reduce insurance costs for companies

Business liability insurance is an important way to protect a business from costly damage. This can be a significant cost factor, especially for small companies.

One of the best ways you can save is by purchasing a Business Owners Policy (BOP). A BOP bundles three main types of coverage: general liability insurance, commercial property insurance, and business interruption insurance. It is usually cheaper to buy one BOP than three separate policies.

Here are some more tips to reduce insurance costs for businesses:

  • Shop around and compare quotes from multiple insurance companies.
  • Bundle multiple policies from the same insurer, e.g. B. Property and liability insurance.
  • Pay your premiums annually instead of monthly.
  • Increase your deductible – if you can afford the expenses you would pay to make a claim.
  • Avoid risks that could lead to harm.

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