What Is the Average Cost of Business Insurance?

Small business owners may have to pay anywhere from a few thousand dollars to upwards of $20,000 for commercial insurance each year. Several factors will impact the exact cost of coverage including the details of the policy, the size and location of the business, the level of risk associated with the business and more.

Continue reading for a more detailed breakdown of how much small business insurance costs including sample premiums for several common types of commercial insurance coverage.

On This Page

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  How Much Does Small Business Insurance Cost on Average?

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  How Much Do Individual Business Insurance Policies Cost?

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  What Factors Impact the Costs of Small Business Insurance?

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  Do Insurance Carriers Offer Discounts for Small Businesses?

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  How To Get Affordable Small Business Insurance

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  FAQs

How Much Does Small Business Insurance Cost on Average?

Business insurance premiums for small businesses can often range from as low as $5,000 to as high as $25,000 per year, according to Paul Schneider, president of Schneider & Associates Insurance Agencies. Naturally, several factors related to industry and location can impact the risk associated with insuring a company, which contributes to the wide range of common small business insurance costs.

“Restaurants and contractors face more liability and safety risks so they pay higher premiums than an office-based consulting firm, for example,” Schneider said in a message to SmartFinancial. “Businesses in disaster-prone areas like Florida also pay more for weather-related risks.”

Additionally, the amount you have to pay for coverage will depend on the specific coverage types your policy includes, so you will need to evaluate your business’ coverage needs and see how much each insurance product costs to get a better estimate of what your premiums could be.

How Much Do Individual Business Insurance Policies Cost?

The below sections will break down the average cost of business insurance policies that you should consider purchasing to cover your small business.

Business Owners Policy (BOP)

On average, business owners policies (BOPs) cost $85 per month through The Hartford and $69 per month through Thimble.^[1][2] BOPs typically bundle general liability, commercial property and business interruption coverage and it is generally much cheaper to purchase a BOP than to buy each type of policy separately.

General Liability

Some sample premiums for standalone general liability insurance include $67 per month on average through The Hartford, $42 per month on average through Thimble and less than $45 per month for close to half of NEXT Insurance’s customers.^[1][3][4]

General liability insurance is one of the most fundamental commercial insurance coverage types, covering medical expenses, repair costs and legal fees related to claims of bodily injury or property damage that your business is held liable for. It can also cover legal expenses if your business is accused of defamation, copyright infringement or some other type of personal or advertising injury.

Commercial Property

Commercial property insurance costs around $134 per month through The Hartford and $45 per month through NEXT Insurance on average.^[1][5] This coverage type can insure your commercial buildings and property stored inside of them like equipment, furniture and inventory against sudden perils such as fire and theft.

Business Interruption

Business interruption insurance is rarely sold as a standalone policy, so the cost of coverage will typically be included in your BOP or commercial property insurance premium.^[6] If a peril covered by your commercial property insurance leaves you unable to conduct business as usual, then your business interruption insurance may help you cover temporary relocation costs and recurring expenses such as payroll.

Commercial Auto

The Hartford customers pay $574 per month on average to cover their whole fleets, while the average per-vehicle cost of commercial auto insurance across the United States is $132 per month as of 2022.^[7] Most states require businesses to maintain auto liability insurance and occasionally other coverage types, while physical damage coverage for your vehicles and medical payments coverage for your employees may be available as optional add-ons.^[8]

Workers’ Compensation

Businesses with less than $300,000 in payroll pay an average monthly premium of $86 for workers’ compensation insurance through The Hartford, while NEXT Insurance’s customers pay $85 per month on average.^[1][9] This insurance product covers medical expenses, lost wages, disability payouts and death benefits as necessary after an employee becomes sick, gets injured or dies in the course of executing their work duties.

Workers’ compensation insurance is required by law for certain businesses in every state. Many states require it for all businesses with at least one employee, while others only require it if you have a certain number of employees, potentially ranging from two to 12 or more. In Texas, workers’ compensation coverage is only required if your company contracts with a government entity.^[10]

Professional Liability

The average monthly cost of professional liability insurance is $76 for The Hartford customers and $45 or less for around 80% of NEXT Insurance customers.^[1][11] Buying professional liability insurance secures coverage for legal expenses in case you are sued for negligence, misrepresentation, breach of contract or another professional mistake. It is legally optional in most cases, although some states require it for certain professions like lawyers and physicians.^[12]

Cyber Liability

Across the United States, the average cost of cyber liability insurance is about $166 per month as of 2022.^[13] Cyber insurance can cover legal expenses and other operational costs that arise if your business is the subject of a cybercrime such as a data breach.

What Factors Impact the Costs of Small Business Insurance?

Some of the primary factors that can impact the cost of small business insurance include the following:^[1][14]

• Risk factors associated with your industry
• Number of employees
• Payroll
• Claims history
• Size and scope of your business operations
• Policy details like coverage types, limits and deductibles
• Location
• Public exposure

Keep in mind that additional factors can play a role depending on the types of coverage included in your policy. For example, how frequently your employees drive company-owned vehicles will affect your commercial auto insurance premium but not your commercial property insurance premium, while the reverse is true of the quality of the materials used to build the structure of your commercial building.^[1]

Do Insurance Carriers Offer Discounts for Small Businesses?

There are various ways small business owners may be able to earn discounted commercial insurance rates. For example, bundling multiple policies together is typically cheaper than purchasing each policy individually, with the most prominent example of a commercial insurance bundle being the BOP.^[1]

You may also save money by paying for a full year’s worth of coverage up front rather than paying in monthly installments. Finally, insurers may offer discounts to companies that employ risk management solutions such as smoke detectors, burglar alarms and accident prevention plans.^[1]

How To Get Affordable Small Business Insurance

In order to find the lowest rate for the business insurance coverage you need, you should consider comparing quotes from around three to five insurance carriers. Some of the details you’ll have to provide to each insurance company include the location of your business, how many people you employ and how much money your business makes each year.

While comparison shopping can be a long-drawn-out process, SmartFinancial can help you speed it up. Simply share information about your coverage needs and budget with us and then we’ll do the legwork of comparing quotes for you. Click here to talk to an agent about comparing commercial insurance quotes for free today.