The State of Business Insurance 2024

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In 2023, high costs and heavy competition caused some large retailers to file bankruptcy. Meanwhile, nearly every industry reeled from supply shortages caused by the COVID pandemic, even after a year of manufacturers speeding up production.

Household names, like Rite-Aid and Bed, Bath & Beyond, are still in operation after filing bankruptcy but with agreements to close some stores, citing theft as the number one reason for exorbitant losses in 2023. Also, over 191,000 workers from tech companies were laid off, while everyone rang in 2024 talking about AI and omni-channel marketing.

Surprisingly, 66% of business owners reported profitability in 2023, according to the U.S. Chamber of Commerce, not an easy feat considering the fact that the Federal Reserve raised interest rates 11 times since March 2022.

As with interest rates, business insurance rates went up too, largely due to commercial property losses caused by severe weather, as well as a rise in business auto claims. Conversely, rates on cyber insurance were very high in 2023 but have leveled off, which is good news as the product becomes ever vital for organizations to have.

Here are some more insights to help you decide on which coverages you need when shopping for business insurance in 2024.

Key Takeaways

  • Overall, commercial insurance rates rose 5.6% in the fourth quarter of 2023 but auto and business property rates went up much more.
  • Cyber insurance was up 15% in 2023 but only 5.6% going into 2024.
  • Shoplifting was up 19.4% year-over-year in 2023 but is not covered by business property coverage.
  • States that have recently had heavy losses due to the weather-related disasters will continue to see premiums rise in 2024.

How Much Did Business Insurance Rates Rise in 2023?

Type of Business Insurance Coverage & Average Increase in Premiums End of 2023

According to the MarketScout Market Barometer, U.S. commercial property/casualty insurance rates rose 5.6% in the fourth quarter of 2023. See how rates have risen over the past couple of years:

Type of Business Insurance Coverage

Average Increase in Premiums End of 2022

Average Increase in Premiums End of 2023

Average Premiums 2024

Commercial Property Coverage




Business Owners Policy (BOP)




Commercial Auto




General Liability




Executive Risk (D&O and Crime Coverage)




Workers Compensation




Cyber Insurance




Factors That Affect Business Insurance Costs

How much coverage you choose, your industry and its risks as well as your location affect the cost of small business insurance. Insurers also consider:

  • Business property. Property damage and theft depend on the value of the insured property, which determines premium pricing.
  • Business revenue. Businesses with higher revenue pay more for insurance because their losses will be larger, if something happens.
  • Number of employees. The more employees a company has, the higher the risk of employee accidents so your workers compensation, a legally required coverage, will cost more.
  • Business insurance coverage. Different types of coverage will come with different costs, and a BOP policy combines the most common ones at a discount.
  • Claims history. A history of claims will significantly increase your insurance rates.

Property Losses Due to Storms



Property Losses


28 weather-related disasters



Hurricane Ian



Hurricane Ida



Hurricane Harvey


Different types of commercial coverage will come with different costs.


Number of Wildfires

Property Losses



3.2 B



18 B



$29 B



$16,5 B

Cyber Attacks and Cyber Liability Insights 2023

In 2023, there was a 15% increase in cyber insurance but in 2024 rates rose less than 6%. It’s important for small- and medium-sized businesses to secure their operation from cyber attacks and cyber insurance can help.

Here are some insights on this important business insurance coverage:

  • According to Deloitte’s Future of Cyber Report 2023, 91% of organizations reported at least one cyber incident last year.
  • There were more ransomware attacks reported in the first nine months of 2023 than all of 2022.[3]
  • In 2023, there were 2,814 breached records in the U.S.[1]
  • Phishing is the most common form of cyber crime.
  • Only 50% of U.S. organizations have cyber insurance[2]
  • Ransomware groups are becoming more organized, operating as gangs and targeting organizations with critical user data.[3]
  • AI is also making phishing and ransomware attacks easier by creating phony emails asking for users’ login information and gaining access to their accounts.[3]

Organized Retail Crime Causing Shrinkage

In 2021 and 2022, Organized Retail Crime (ORC) caused many losses, and not just to giants like Target and Walmart. Mom and pop shops were also burglarized, and losses were devastating.

In 2022, losses amounted to more than $112B. In 2023, many task forces across the country were ready in time for the shopping season, but shoplifting still went up 19.4% year-over-year. However, more than half of the losses are cargo theft, so it’s the loss of inventory before it hits the shelves, which would be covered by business property insurance.[5]

While products stolen off shelves are not covered by commercial insurance, stolen inventory from warehouses and storage are covered. If a shop needs to be shut down temporarily to replace shattered cases and such, business interruption coverage would take care of losses in income.

Inflation and the Cost of Business Insurance

Inflation is now the highest it’s been in decades, and it affects business insurance, which is dependent on the price of labor, operational costs and materials – all of which have soared from the end of 2022 to now.

Labor, and materials/parts are necessary to rebuild or replace business property destroyed in a fire, after a severe storm or stolen in a heist. In 2024, expect inflated pricing on business property insurance and commercial auto policies due to inflation.

Severe Weather and Commercial Insurance Rates

Climate change results in more frequent and more severe natural disasters each year. That, coupled with inflation, is driving the cost and demand for construction materials and skilled labor sky-high. Rebuilding a business after a wildfire, hurricane, flood or hailstorm is more expensive than ever.

States that have recently had heavy losses (and/or see losses annually) due to the following disasters will continue to see premiums rise:

  • Wind storms
  • Floods
  • Wildfires

Note that business property destroyed or damaged in a flood will only be covered by commercial flood insurance.

Loss Prevention Tips for Businesses 2023

  • Install security cameras in case of theft.
  • Install sprinkler systems in case of fire.
  • Regularly maintain electrical systems, furnaces and water systems.
  • Implement fire safety inspections.
  • Create severe weather procedures.
  • Create lock-up procedures.
  • Write up escape plans for fire and response teams for medical emergencies.
  • Clean floors and hallways to prevent slips and falls (by customers and employees).
  • Require contractor licenses and certifications for safety.
  • Teach employees about ransomware so they do not fall for a scam.
  • Utilize technology in the form of security tags if you’re a retailer.
  • Train employees on how to respond to menacing organized retail crime bandits.
  • Buy adequate business insurance to cover your losses in case something happens, to keep your business in good financial shape.
  • Protect your passwords: Make sure they are unique and don’t share them with anyone.
  • Pay attention to software updates, which often contain security patches and are important in keeping your devices safe.
  • Make your employees aware of suspicious links and emails, even text messages supposedly sent from the company.
  • Make sure any payments made are legitimate by reviewing invoices and only paying vendors by going directly to their website, not by clicking on an email link, which could be a scam.

What Are Your Commercial Insurance Needs in 2024?

The type of business insurance coverage you need depends on the industry and the size of your business. If you’re unsure about your business’s insurance requirements, it’s a good idea to do some research or find an agent who is knowledgeable after selling these products for years.

When you compare business insurance quotes online, you’ll have the opportunity to speak with a few agents. Choose one that is helpful and experienced in protecting businesses like yours.

Here are some commonly purchased insurance coverages to consider for your organization:

Property Insurance

Due to inflation, repair and replacement of office equipment, furniture and even the building, if you own it, have gone up a considerable bit over the past few years. Going into 2024, rates have increased by an average of 18 to 20% so expect to pay even more. Replacement value of most properties has increased significantly, but it may still save you thousands of dollars over getting a payout at actual cash value when the next disaster strikes. The reason you should have property insurance is also the same reason why rates have risen: severe weather events, which include storms and flooding. Remember that commercial flood insurance is sold separately.

General Liability Insurance

General liability coverage is experiencing modest increases going into 2024, less than 5%. This is good news because general liability insurance will protect you against expensive lawsuits if guests or visitors are hurt when visiting your place of business. It’s the main component of a business policy.

Commercial Auto Insurance

Distracted driving accidents and severe weather events have driven up auto insurance costs, and that includes commercial auto insurance. The cost to fix a damaged auto has been affected by inflationary prices of labor and parts. Also, the cameras and sensors on newer cars cause everyone’s premiums to rise, even if your company car or fleet is five years old. Low inventory of cars and other factors have contributed to a significant increase in commercial auto insurance premiums.

Workers Compensation

Rates are expected to increase, but this is one type of coverage you don’t want to go without. If one or more employees gets injured or falls ill due to their employment, this is the coverage that you’d need to stay whole.

Expect More Workers Compensation Claims

If you have high turnover at your business, at any level, expect to pay more in workers compensation claims. New workers are always more prone to injuries than experienced workers, and according to the 2022 Travelers Injury Impact Report, 38% of injuries happen during the first year of work.

To prevent injuries before they happen, create a robust training program during onboarding. Also, work to reduce turnover, which is expensive for a business on several fronts!

Executive Risk

This type of protection includes directors and officers (D&O) liability, employment practices and crime coverages. In 2023, the rates for this coverage went up nearly 19% but going into 2024, they only went up 8%. Despite the cost, it is important to protect executive-level employees for most organizations.

Professional Liability

This is a good product to have if your organization runs the risk of being accused of negligence, misrepresentation and inaccurate advice.

Cyber Insurance

The costs of cyber insurance skyrocketed in 2023, going up as high as 100% for some businesses. Prices have now leveled, and there has only been a 5.6% increase since last year. It is a good idea to shop around for the best rate but don’t turn your noses at this product if you have an e-commerce store or a robust website that can be hacked. Data breaches and ransomware are painful problems to have if you don’t have the proper insurance coverage.

Business Owners Policy (BOP)

A business owners policy (BOP) combines general liability insurance, business property insurance and business interruption insurance. BOPs are great coverage solutions for small and mid-sized businesses and offer a better rate than buying these coverage separately. Some insurers charge as low as $300 to $500 per year for a policy.

What’s the Best Way to Combat Rising Business Insurance Rates?

The only way to know who can offer you comparable coverage as you already have – or possibly a more comprehensive policy for the same price – is to compare rates. Calling each insurer and going through the application process is too time consuming. Plus, rates change daily so it’s like comparing apples to oranges. Use SmartFinancial to compare rates once and see which agents in your area have what you’re looking for in a business policy.

Find the Commercial Insurance for Your Business

Business Insurance 2024 FAQs

Why did commercial insurance rates increase in 2024?

Rate increases of an average of 5.6% are not too bad, but surges in commercial auto and business property coverage rates are due to severe weather.

Is business insurance required legally?

Yes, if you have employees, you must carry workers compensation. If you have a company car or fleet of company cars, they must have commercial auto insurance coverage. Other coverages may be optional but wise to have in case something goes wrong.

Is business insurance tax deductible?

As long as the coverage is for the purpose of operating a business, a business policy is tax deductible. If the coverage is for a self-insurance reserve fund or a loss of earning insurance policy, it is not tax deductible.

What is the most essential business insurance coverage?

Most businesses need general liability insurance, professional liability insurance and workers' compensation insurance if they have employees. Some businessowners buy a business owners policy, which bundles the most common coverage. Business auto is another very common coverage that people need if they use their car for work.

Get a Free Commercial Insurance Quote.