How Much Does It Cost For Small Business Insurance? Do you want to know how much it costs for small business insurance? Well, I believe you do want to know. Well, this is something that is most searched for online by many users, but they can’t find the right information. Today you’ve gotten to your final bus stop.
How Much Does It Cost For Small Business Insurance?
Insurance is also a necessity for most small businesses, but the cost of coverage varies widely from one company to the next depending on the size and also the nature of your business.
A small firm with 10 employees and also a fleet of vehicles can then simply have different business insurance needs than a solopreneur with no employees or even physical office space. And those differing needs can come with differing premiums.
Keep reading to learn what types of coverage are available and also what factors go into your rate. We will also dig into the average cost of business insurance to help establish a baseline as you shop for coverage.
Factors That Affect The Cost Of Your Small-Business Insurance
With most types of business insurance, your rate can simply come down to a few key factors:
Some professions are simply, or typically, inherently riskier than others. And higher risk equals higher premiums. That’s one of the reasons why a construction or manufacturing company will simply pay more for the same type of coverage as an advertising firm or home-based e-commerce business.
Workers’ compensation insurance gets even more specific, drilling down to the job function of each employee to be able to then determine the cost of coverage for a given business.
Insurance rates can then vary based on where your business operates. This is especially true with workers’ compensation insurance since state laws can simply dictate everything from coverage levels to how you purchase a policy.
The location also plays a role in commercial auto insurance costs. Premiums are also, if not always, higher in cities and areas with a higher-than-average claim rate.
The number of employees you have directly correlated to the cost of your business insurance. The reason? More employees simply equal more opportunities for injury, incident, or accident.
Larger businesses can even expect to pay more for business insurance than a company with few or no employees. And businesses with no employees might then be exempt from state workers’ compensation mandates, saving them from costly business insurance coverage.
Payroll and Sales
The cost of workers’ compensation insurance is even directly correlated to the size of your annual payroll. The average cost of this coverage is simply or typically 70 cents to $2.25 per month, per $100 of payroll, according to a 2020 report from the National Academy of Social Insurance.
Insurers also simply use revenue as a measuring stick for risk for general liability insurance. The logic goes as follows: the more customers you have, the more likely you will be injured or aggrieved in some way.
A history of business insurance claims is also a red flag for insurance companies. It simply then signals your business is either inherently risky or that your company is not taking proper steps to mitigate risk.
Coverage and Deductibles
How much your policy will then pay out, and also under what circumstances, affects the overall cost of your business insurance.
A commercial auto insurance policy with comprehensive coverage, for example, will then cost more than one with the minimum amount of liability coverage required by the state. Likewise, a general liability policy with an aggregate limit of $2 million will then have a higher premium than one with a $1 million limit.
Opting for a low deductible will actually increase the cost of your business insurance policy.
The Average Cost of Small-Business Insurance
Business insurance costs will simply vary from one insurer to the next based on the factors noted above. Some insurance providers are even more upfront with average costs, which then gives you a figure to index against as you shop for coverage.
Here are the average costs of business insurance in 2020, as reported by Progressive.
Types of Coverage
The average monthly cost
Commercial auto insurance
A business owner’s policy
It’s best for you to get multiple business insurance quotes for any coverage you need and even inquire about discounts (more on that below). Some insurance companies offer quick and easy online quotes, while others require you to talk with a local agent or broker to get pricing details.
How To Lower The Cost Of Your Business Insurance
The best way for you to then save money on your business insurance is simply to have very few claims made against your policy.
Insurance companies reward businesses that are also diligent about worker and even customer safety but will deny those with a history of accidents, workplace injuries, or negligence lawsuits.
You can even earn discounts on your business insurance if you take the following steps:
- Bundling your coverage. Most insurance providers simply offer discounts if you combine multiple types of business insurance into one policy, such as a business owner’s policy.
- Prepay your annual premium. Your insurer might even offer a discount if you pay annually rather than monthly.
- Adjust your deductibles. Typically, a higher deductible equals a lower premium.
- Invest in workplace safety. Minimize your risk profile by simply offering formal safety training and keeping up with routine facility maintenance.
How Much Does General Liability Insurance Cost?
The cost of general liability insurance simply varies based on your business operations and policy limits, among other factors. Small businesses pay about $42 per month for this policy.
How Much Does Errors & Omissions Insurance Cost?
Errors and omissions insurance (E&O), also known as professional liability insurance, simply protects your small business from the financial risks of professional mistakes. Several factors will even impact your errors and omissions insurance cost, including your industry and type of business.
How Much Does Professional Liability Insurance Cost?
Professional liability insurance, also known as errors and omissions insurance (E&O), protects your small business from the financial risks of professional mistakes. Any business that simply provides professional services or simply offers advice, like consultants, should consider this coverage. Your industry and the scope of your services affect the cost of this policy.