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How much does small business insurance cost – Forbes Advisor

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Editor’s note: I earn commissions from partner links on Forbes Advisor. Commissions do not affect editors’ opinions or ratings.

Small business premiums range from approximately $14 to $124 per month, depending on the type of policy purchased: General Liability, Commercial Property, Business Interruption, Inland Shipping, Cyber ​​Liability, and/or Workers Compensation is. Purchasing all of these coverage types will end up paying about $340 per month.

Here’s an overview of how these costs are broken down and which factors have the most impact on rates when buying the best small business insurance.

Overview of business insurance premiums

Comprehensive liability insurance premium

General liability insurance protects you from lawsuits and claims if someone injures you with your property or damages someone else’s property. According to a recent Hiscox study, it typically costs about $30 per month. The survey found that 95% of his business owners pay less than $50 a month and only 1% pay more than $100.

What factors affect the premium for general liability insurance?

These four factors have the most impact on general liability insurance premiums.

  • building sizeThe bigger the building, the more chance there is for an accident. Therefore, you can pay more if you operate in a large, high-traffic facility.
  • positionBusinesses operating in high-crime, high-risk areas may pay more on liability insurance.
  • Scale of Personnel Expenses and Annual IncomeThe higher the expenses and operating costs, the more you can expect to pay for liability insurance.
  • Billing historyIf you have previously applied for general liability insurance, your premiums may be higher.
  • Policy detailsCoverage limits, deductibles, and other policy details affect the cost of business insurance.

commercial property premium

Commercial property insurance protects your business against losses in the event of fire, natural disasters, theft, or other incidents.

According to Insureon, the median cost of commercial property insurance is $63 per year. This is for a standard coverage limit of $60,000 and a deductible of $1,000.

Nearly half (42%) of business owners pay between $46.67 and $83.33 per month for commercial property insurance, and 16% pay less than $46.67 per month, according to Insureon research.

What factors affect the cost of commercial property insurance?

Several factors can affect the cost of commercial property insurance.

  • positionOperating in high-risk areas prone to natural disasters can result in higher insurance premiums.
  • Building age and sizeInsuring older or larger buildings will cost more than insuring smaller or newer buildings.
  • type of fire protection. Easy access to sprinkler systems, smoke alarms, and fire stations can lower your insurance premiums.
  • equipment cost. Commercial property insurance covers loss or damage to property, so expect to pay more if you own expensive equipment.
  • Types of hazards coveredAs with home insurance, you’ll pay more if your business needs to cover additional hazards such as floods, earthquakes, or employee theft.

Business interruption premium

If you have to temporarily close your business due to an insured loss, business interruption insurance can help cover the loss of income and pay your operating expenses in the meantime. This includes lost revenue, mortgage, lease or rent payments, loan payments, taxes, labor costs, relocation costs, and training costs.

According to Insureon, the average cost of business interruption insurance is $40 to $130 per month, or $500 to $1500 per year.

What factors affect the cost of business interruption insurance?

There are three main factors that affect the cost of business interruption insurance:

  • EarningsBusiness interruption insurance covers lost profits, so the higher the company’s turnover, the higher the premium to cover it.
  • industryIn industries such as restaurants, property damage is more likely and you will pay higher business interruption insurance premiums.
  • the value of your business assets. In general, the higher the value of your commercial property, the more you will pay for business interruption insurance.

Inland marine insurance premium

Inland marine insurance protects your business if something happens to your property or products in transit. (such as lawn mowers and camera equipment).

According to Insureon, the median cost of inland marine insurance is $14 a month or $169 a year. This is a $5,000 coverage limit.

Insureon has found the $5,000 coverage limit to be the most popular choice among customers in the landscaping, cleaning, installation and construction industries.

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

What factors affect the cost of inland marine insurance?

There is one main factor affecting inland marine insurance. Equipment or product cost. Small business owners who need to transport expensive equipment or products can expect to pay higher premiums.

Cyber ​​liability insurance costs

Cyber ​​liability insurance protects your business against financial losses that may occur as a result of cyberattacks. This type of insurance can cover costs associated with repairing or restructuring your business after a cyberattack, as well as legal fees and settlements.

According to AdvisorSmith, the average cost of cyber liability insurance is $123.75 per month or $1,485 per year. However, depending on the industry, companies can pay anywhere from $650 to $2,357 per year.

For example, AdvisorSmith found that companies in the payment processing, financial services, investment services, legal, and insurance industries pay the most for cyber insurance. Companies in transportation/logistics, administrative services, manufacturing, automobile sales, and construction have the lowest salaries.

What factors affect the cost of cyber liability insurance?

There are several key factors that affect the cost of cyber insurance.

  • industryBusinesses exposed to cyber risk may require policies with higher levels of coverage and therefore higher premiums.
  • Your company’s revenues and expensesThe higher your revenues, expenses, and operating costs, the more you can expect to pay for your cyber insurance.
  • your network securityStrong network security practices, or lack thereof, impact cyber claim risk.
  • The number of people who have access to your system and data. More access can mean more risk, which can lead to higher premiums.
  • Claim historyPast cyber insurance claims can affect future cyber insurance premiums.

Industrial accident insurance premium

Workers’ Compensation Insurance is insurance that helps employees if they are injured on the job. Insurance companies usually help pay for things like medical bills and lost wages.

According to The Hartford, workers’ compensation insurance costs an average of $70 a month, or $840 a year for companies with less than $300,000 in labor costs.

In most states, you are legally required to have workers’ compensation if you have at least one employee. However, workers compensation laws vary from state to state. For example, if in Alabama she has less than 5 employees, or in Arkansas if she has less than 3 employees, it is not required. Workers Compensation insurance is not required in Texas or Wyoming.

What Factors Affect Workers Compensation Insurance Premiums?

There are three main factors that affect workers’ compensation costs:

  • salary scaleThe larger the company and the larger the scale of labor costs, the more workers’ compensation insurance you can expect to pay.
  • employee dutiesExpect to be paid more for employees who perform higher-risk duties. For example, workers in clerical jobs have lower compensation costs than manual workers such as construction and mechanical work.
  • positionIf you live in a monopoly state such as North Dakota, Ohio, Wyoming or Washington, the law requires you to purchase state-funded workers compensation. I have no other choice. However, in other states, you can scour the private market for worker comp quotes.

You can expect to pay about $340.75 total per month, or an average of $4,090 per year for all six policies above.

How to lower the cost of business insurance

Commercial insurance is an important means of protecting a business against costly losses. This can be a significant expense, especially for small businesses.

One of the best ways to save money is to purchase a Business Owners Policy (BOP). BOP includes three basic coverage types: general liability insurance, commercial property insurance, and business interruption insurance. It’s usually cheaper to buy BOP than to buy three separate policies.

Here are some other tips for reducing the cost of business insurance.

  • Compare quotes from multiple insurance companies.
  • Group multiple insurance policies from the same insurance company, such as property and casualty insurance.
  • Pay your premium annually instead of monthly.
  • Increase your deductible. If you can afford the out-of-pocket costs you pay to file a claim.
  • Avoid risks that may lead to charges.

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