How much does business insurance cost?

Most small businesses with few or no employees can get properly insured from somewhere between $500 and $1,000, but it really depends on a multitude of factors. Below we provide some sample prices based on industry and type of coverage, but it’s important to understand that these are very general estimates. Several factors affect the price of small business insurance.

If you’re a small business owner you will obviously pay less for business insurance than a large corporation. The main reason is that you face less risk. The amount of risk you face is the main factor that determines how much your insurance will cost each year. As you grow, the coverage you need will adapt and change, and it will likely cost more.

Commercial insurance prices vary widely from business to business, so the best way to find out how much insurance will be is to fill out a simple form about your business, and we’ll find you the best prices.

Cost factors

Number of employees
There are fewer liabilities involved when you’re working on your own than when you start to employ other people. There is more room for error when you have other people involved in your operation. That’s why the policy rates of some insurance coverages, like workers’ compensation and general liability, are based on your payroll. The higher your payroll, the higher your insurance costs.
Revenue
Smaller operations typically pay less for insurance coverage compared with larger companies, because they face fewer liabilities. In general, the higher your revenue, the greater your risk exposure. Some insurance policies, such as general liability insurance, are based on your income.

It makes sense because the more you make, the more exposure you have (and the more you have to lose). And the more exposure you have, the more coverage you need. The cost of your policy rises with the level of exposure.

Your industry
Low-risk industries can typically get more affordable insurance. Lesser risks include florists, insurance agencies, retail stores, web designers, and photographers. If you’re a consultant, contractor, or manufacturer, you will probably have a more expensive premium because you face more risk and liabilities. This is especially true for general liability and professional liability insurance.
Your location
The price of commercial property and general liability insurance varies by state and zip code. For example, rural areas oftentimes have higher commercial property rates compared with urban areas, because fire departments or fire hydrants are less accessible.

However, a shop in an urban environment usually pays more for general liability insurance because there is more foot traffic in their location compared with a country general store.

Your business property
Some insurance policies, such as commercial property, general liability insurance and business owner’s policies, will take into account the size of your building, office space, and business assets. This makes sense because the more property you need to protect, the more your insurance will cost.
Your policy limits
Policy limits refer to the maximum amount an insurance provider will pay for a claim. If you select your coverage limits to be $500,000, the price of your insurance policy will be lower than if you choose a policy with limits of $1 million. Your limits are essentially detailing how much coverage you are asking for from the insurance company. The more coverage you need, the more your policy will cost.
Your deductible
A deductible is the amount of money you must pay for a claim before an insurance company begins their payout. If you choose a lower deductible, the price of your policy will typically go up. Alternatively, if you choose a higher deductible, the cost will be lower because you’re sharing more of the risk with your insurance provider.
The types of coverage you need
Each type of insurance policy covers a specific set of risks and therefore has its own range of rates. In general, the higher the liability limit, the higher the cost of the insurance policy.

For example, general liability insurance typically costs less than professional liability insurance because many general liability accidents are relatively simple claims. Let’s say you’re a dentist and a client comes to your office for a checkup. Your patient trips on the stairs and fractures their wrist, which would be covered by your general liability policy.

But if you accidentally crack the patient’s tooth, that claim would be covered by a professional liability policy. A malpractice lawsuit will be more costly in most cases, which is why general liability tends to cost less than professional liability insurance.

Additional insurance cost factors

Your industry

Obviously, different professions face different risks.

In a sense, a bookkeeper faces much less risk than a construction worker. Therefore, workers’ compensation insurance is less expensive for bookkeepers than construction workers.

However, a bookkeeper most likely handles more sensitive information than a construction worker, so their cyber liability policy would be more expensive.

If the bookkeeper works remotely, and doesn’t have much in-person interaction with clients, their general liability policy would be less expensive than a construction worker’s. This is because contractors work on job sites and interact with clients’ property. Therefore, there is more risk of property damage and bodily injury.

Consultants, architects, and engineers tend to have higher professional liability premiums than designers, writers, and small retailers because they provide expert advice and services. Meaning, they are at more risk for claims related to negligence and professional errors.

Claims history

With most coverages, insurance companies will raise the rate for the industry as a whole if many people have filed claims within the same field. So, let’s return to our bookkeeper and contractor example. More contractors have filed work-related illness or injury claims than bookkeepers. Therefore, the workers’ comp classification rate for someone in construction is higher than for a clerical worker.

However, if few claims have been filed in your industry, insurance companies may lower the rates based on good claims performance.

Cost information by coverage

Prices vary by policy

Insurance rates depend on the level of risk the policy is covering. Those considering professional liability insurance are looking to cover different liabilities than those purchasing commercial auto insurance. With higher risk, comes more potential for claims. Because of this, some insurance coverages are more expensive than others.

See the graph below to get a better understanding of how insurance rates vary by coverage.


General liability insurance

This is the first type of insurance most business owners will buy, because it provides great baseline protection. General liability insurance covers various mishaps, including physical claims like bodily injury or property damage, as well as non-physical risks such as copyright infringement, libel, slander, and false advertising. Court costs are also covered with this policy in the event that you face a lawsuit.

Elements that affect the cost of this policy include:

  • The location of your business
  • If you meet with your clients in person
  • If you represent clients

How much does general liability cost?

On average, small business owners with between 1–10 employees typically pay between $400 and $650 per year.

Check out our general liability insurance cost analysis to learn more.


Depending on your line of work, general liability insurance prices can vary.

Professional liability insurance

Also known as errors and omissions (E&O), this policy is important for anyone who provides expert advice or services to clients. When people depend on you for your expertise, that comes with risk. And if your advice turns out to be the wrong advice, you could face a lawsuit from an angry client.

Professional liability insurance covers negligence, failure to deliver promised services, professional errors, and court costs (should you face a lawsuit).

Factors that affect the cost of professional liability include:

  • Your profession
  • Your location
  • Your size
  • Your tendencies
  • The number of claims your industry has filed

How much does professional liability cost?

Many smaller operations can expect to pay between $600 and $1,800 per year, although the policy average is around $900 for professional liability, or errors and omissions insurance.

Check out our professional liability insurance cost analysis to learn more.


The level of limits you select for you policy affects the price of the coverage. The higher the limits, the more you will spend.


Commercial property insurance

Most professionals rely on some sort of device, tool, or piece of equipment to successfully complete their work. Commercial property insurance covers commercial property replacements or repairs in the event of a natural disaster, burglary, fire, or flood.

Covered business property includes:

  • Tools
  • Equipment
  • Devices
  • Furniture
  • Supplies
  • Inventory
  • And more

How much does commercial property insurance cost?

The price depends on the value of the items you would like to insure, but if you’re a modest operation, you could pay as little as $400 per year. However, if you’re looking to cover high-value items, the price will increase.

Business owner’s policy

Also known as a BOP, this policy combines general liability and commercial property insurance into a package deal. Business owner’s policies provide more coverage, and at a lower price than by purchasing each of the policies separately. The great thing about BOPs is that it’s quite simple to tack on additional coverages to the package as well.

Cost factors include:

  • Your claims history
  • Number of employees
  • Your revenue
  • The worth of your business property

How much does a business owner’s policy cost?

The price of a BOP depends on the size of your business. If you’re a one-person operation, you could pay as little as $250/year, but most small businesses typically pay around $1,000/year for this policy. Check out our business owner’s policy cost analysis to learn more.

Workers’ compensation insurance

Work comp is often legally required if you have employees, but many business owners purchase a policy to cover themselves as well. Workers’ compensation insurance is very important because it covers job-related illnesses and injuries. Medical bills can be quite costly, and this coverage can help cover them.

Elements that affect cost include:

  • Your profession
  • Where you do business
  • Your payroll
  • Your claims history

How much does workers’ compensation cost?

Calculating workmans’ comp rates is very specific. The cost of workers’ compensation is calculated by the following equation:


Additional factors include the expense constant, which covers administrative fees. This averages around $200. If you are eligible for any premium discounts, it will affect the price as well. Learn more about the price of workers’ comp.

Check out our workers’ compensation insurance cost analysis to learn more.

Cyber liability insurance

This coverage protects you, your business, and your customers in the event of a cyber threat. If you handle any sensitive customer information, even something as simple as credit card information, you should consider this policy. In the event that your customers’ information is exposed, it is a very long, expensive road to remedy.

Cyber liability insurance helps you and your customers stay protected, and helps cover the costs of customer notifications, forensics investigations, credit monitoring, and more.

Cost factors include:

  • Your profession
  • The types of information you gather
  • How many transactions take place
  • How many devices are involved
  • Where you do business

How much does cyber liability cost?

The price of the policy usually starts at around $750 for an annual policy. From there, the cost can increase based on the factors above.


Commercial auto policy

If your business owns vehicles, you need this policy. Plain and simple. Not everyone realizes this, but if you are driving a vehicle owned by your business and something happens, your personal auto policy typically will not cover the incident.

Protection benefits of commercial auto insurance include bodily injury liability coverage, property damage liability coverage, physical damage coverage, and collision coverage.

Elements that affect cost include:

  • The vehicle make and model
  • The age of the vehicle
  • The cost of the vehicle when it was new
  • The vehicle’s weight
  • The user’s driving record

How much does commercial auto insurance cost?

Generally speaking, the average cost per vehicle is around $750 per year.

Hired & non-owned auto insurance

Hired & non-owned auto insurance is necessary if you hire, rent, or borrow vehicles for work. It also extends liability coverage to employees who use their personal vehicles on behalf of your business.

How much does hired & non-owned auto insurance cost?

This endorsement is very affordable, and can start from as little as $100 per year.

Inland marine insurance

If you have commercial property insurance, that’s great! But the downside of business property coverage is that the protection ends after you are 500 feet away from your premises.

To protect your commercial property off-premises, you’ll need inland marine insurance. If you take your tools, equipment, or supplies to client meetings and other job sites, this policy will protect your property in transit and at other locations.

How much does inland marine insurance cost?

The price depends on how much coverage you’re interested in. For example, you could pay $250 for $10,000 worth of coverage, but it all depends on what you do, what you’re covering, and what the property is worth.

Umbrella insurance

Umbrella policies add extra protection to existing policies. So, if you have a commercial auto policy, but are looking for an added layer of padding, you can place an umbrella on top of your business auto policy.

Let’s say your auto insurance policy has limits of $500,000. You get in an accident while driving on behalf of your business, and the damages result in $600,000. While your commercial auto policy payout is capped at $500,000, your umbrella insurance can pay the remaining $100,000.

How much does umbrella insurance cost?

Depending on the liability limits you select, you might expect to pay between $400 to $600 per year.


How to find low-cost insurance

Bundle coverages to get a better deal

Many insurance companies will give you the option to package things together, and by doing so, you can save money. A business owner’s policy is a popular option for low-risk businesses. As stated above, a BOP combines general liability and commercial property insurance into a bundled deal. These packages allow you to get more coverage, and at a lesser price than purchasing each of the policies separately.

Bonus: You can easily include additional coverages and endorsements to the package based on your needs.

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