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Small Business Insurance Cost

Business Insurance Cost

To ensure optimal operation and desired profit, any business requires an investment, whether it is in equipment, machinery, or human resources.

Unfortunately, a wide range of events can negatively affect your business, from economic factors to natural disasters or accidents, without you being able to control the situation. In order to meet the unwanted situations and to be able to cover the losses, the insurance companies offer you a series of flexible insurance plans, through which you can protect your business at any time.

How Much Does Small Business Insurance Cost?

It is pretty difficult to estimate the average cost of small business insurance without getting a quote from an insurance agent as every business is different. However, you can get an idea of how much you should budget for your small business insurance by looking at the table below.

 

Type of Business Insurance Average Monthly Premium Average Yearly Premium
BOP $187 $2,240
Workers Comp $257 $3,085
Professional Liability $138 $1,660
General Liability $139 $1,667

As you can see, there are different types of business insurance which can be confusing. So, in the following lines, we are going to go through each of these.

Professional Liability Insurance

You might also like our articles about commercial property insurance, SR22 insurance, or car insurance.

This type of insurance is designed for certain business owners who are susceptible to claims like negligence or malpractice.

General Liability Insurance

Through the General Liability insurance (GL) the business owner is protected from the claims regarding personal injury and property damage.

Worker’s Comp

Worker’s Compensation insurance is also known as disability insurance and covers workers’ injury or illness. With this insurance employees are protected from losing their wages and it covers the medical expenses in the event of an accident or other health conditions. Also, the employer is protected from being sued for negligence in case a worker gets hurt while working. This insurance is required in some states, while in others it is not. EPLI insurance is a similar policy to worker’s comp.

How Much Do Other Types of Business Insurance Cost?

Depending on your industry, your business may need some other types of insurances as well. For example, business owners from the healthcare industry have more risks. In the table below you will find the average costs of other types of business insurance plans.

Business Insurance Type Average Cost
Umbrella Insurance $120/month
EPLI Insurance $130/month
Special Events Insurance $240/event
Liquor Liability Insurance $130/month
Commercial Auto Insurance $65/month
Product Liability Insurance $190/month
D&O Insurance $55/month
E&O Insurance $150/month
Professional Liability Insurance $65/month

Average Cost of Business Insurance by Revenue

Your business insurance costs will be affected by the amount of revenue the business actually earns in a given year. At first, it may seem odd, but it makes sense because the more a business earns, the more it has to lose. For example, in case of a workplace comp accident, you can be sued for a large sum of money. So, the cost of insurance for businesses with increased revenues will be higher. In the table below you will find the average costs of business insurance plans taking into consideration the revenue per year.

Revenue per Year Average Monthly Premium Average Yearly Premium
$250,000 $4,748 $396
$100,000 $3,141 $262
$50,000 $2,232 $186

Average Cost of Business Insurance by Profession

The cost of business insurance is greatly influenced by the industry. There are some industries that are more insecure than others, so the insurance companies have greater risks. For instance, more workplace injuries will be registered at a restaurant than at a freelance writing business. In the table below you will find the average costs of business insurance for some of the most popular professions.

Professional Average Monthly Premium Average Yearly Premium
Restaurant Owner $831 $9,976
Landscaping** $824 $9,891
Salon $563 $6,757
Financial Advisor $331 $3,972
IT Firm $331 $3,972
Marketing $289 $3,465
Grocery Store Owner $192 $2,306
Freelance Writer $126 $1,510

The cost of insurance for businesses that requires more employees or work with various equipment such as running a restaurant will be higher because the risk of workplace accidents is also higher. As a general rule, one industry will be more expensive than another due to the worker’s comp policy.

Average Cost of Small Business Insurance by Number of Employees

The cost of your workers’ comp insurance will be affected by the number of employees. The chance of a work accident is greater if you have more employees, so the insurance companies are posed with greater risks. In the table below you will find the average cost of small business insurance depending on the number of employees.

Number of Employees Average Yearly Premium Average Monthly Premium
25 $3,229 $269
10 $2,652 $221
1 $320 $26

Average Cost of Small Business Insurance by State

Business Insurance CoverageEvery state has its own rules when it comes to business insurance. There are some states where it is mandatory to have a worker’s comp insurance while in others it is optional. Also, some states will have minimum coverage levels that vary by state. The greatly individualized nature of business insurance along with these factors will influence the cost. You should not be surprised to see that in the same state the cost of business insurance will be different.

In order to get a better idea about how the business insurance cost varies by state, here is the average amount of money a business owner has to pay for workman’s comp insurance per every $100 of payroll:

  • Iowa: $1.90;
  • Illinois: $3.23;
  • Michigan: $2.57;
  • Indiana: $2.17;
  • Missouri: $2.95.

This means that an employer from Iowa has to pay an average of $190 for every $10,000 of payroll.

Other factors that affect the cost of small business insurance

There are some other factors that will affect the cost of small business insurance such as the breadth of coverage and the place where you are living.

Your geographical location

The final cost of small business insurance will be influenced by the state you live in, though to a lesser degree.

Coverage width

You will have to pay more for business insurance if this covers more situations. Also, some businesses may need more types of insurance. For example, a restaurant will require liquor liability insurance in case it serves alcohol to clients, while a landscaping business will require commercial auto insurance.

You can save money with a Business Owners Policy (BOP)

The business owner policy (BOP) is that type of package deal insurance that contains coverage for all the basic types of insurance any business owner needs such as liability and property insurance. As this is bundled is sold at a discount rate.

Where to buy business insurance?

You can find a large range of coverage for various types of businesses at small business insurance companies. However, you may want to consult a specialist to find the right insurance company and coverage for your own business. You can get help in finding the right coverage from any of the many insurance plans if you talk with an independent insurance agent. Though, they work for the insurance companies.

On the other hand, an insurance broker will work just for you. They will present you the features of the coverage you may need and every insurance company that can provide this coverage and at what cost.

Do I need business insurance?

Yes, any business owner needs business insurance. Whether you own a candy factory or a toy store, you have to take care of the performance of your business, but the dangers are everywhere. By opting for small business insurance, you will have the certainty that, regardless of the risks to which your business is exposed, you will more easily overcome any problems, both financially and in terms of the time needed to repair the damage.

Conclusion

As all businesses are different no small business insurance will be an on-size-fits-all situation. You can choose to customize your insurance according to the specifics of the activity, thus ensuring your business against a wide range of risks. There are a number of additional clauses that can extend the basic coverage. You can optimize your costs by choosing the optimal package: cost – coverage – support, adapted to your needs.

Alec Pow
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