How Much Is Business Insurance

Business insurance expenses can exhibit significant disparities. For instance, individuals procuring a business owner’s policy through Progressive typically incur an average monthly cost of $101, whereas those opting for coverage from The Hartford face an average monthly expense of $261.

This considerable divergence in costs arises from various determinants.

Factors such as the specific policies required, the extent of coverage provided by those policies, and the nature of your business all contribute to the overall expense of business insurance.

Generally, the greater the coverage needed, the higher the anticipated expenditure.

To gauge your company’s potential costs accurately, it is advisable to obtain multiple quotes for business insurance.

How much is Business Insurance
The average cost of business interruption insurance is between $40 and $130 per month, or $500 and $1500 per year: Photo source (Insureon)

Here are the average costs of business insurance as reported by several different insurance companies.

Types of coverage

Average monthly cost from Progressive

Median monthly cost from Insureon

Average monthly cost from The Hartford

General liability insurance

$65.

$65.

$88.

Business owner’s policy

$101.

$99.

$261.

Workers’ compensation insurance

$111.

$111.

$70.

Commercial auto insurance

$188.

$142 (median, not average).

No data.

Professional liability insurance

$56.

$97.

No data.

Insurance costs vary due to policy differences. For example, The Hartford offers additional options like professional liability and data breach insurance, increasing premiums.

Companies differ too. Insureon, an online marketplace, connects shoppers with quotes from various insurers, allowing for cost-effective choices.

To find the best coverage, get multiple business insurance quotes.

Some insurers offer online quotes, while others require discussions with local agents for detailed pricing.

Factors that affect the cost of your small-business insurance

 

With most types of business insurance, your rate comes down to a few key factors:

Industry

Some professions are inherently riskier than others, and higher risk equals higher premiums. That’s one reason why the cost of professional liability insurance will be higher for an architecture firm that works on public buildings than for an insurance agent who works with individual clients.

Workers’ compensation insurance gets even more specific, drilling down to the job function of each employee to determine the cost of coverage for a given business.

Location

Insurance rates can vary based on where your business operates. This is especially true with workers’ compensation insurance since state laws can dictate everything from coverage levels to how you purchase a policy.

Location also plays a role in commercial auto insurance costs. Premiums are typically higher in cities and areas that have a higher-than-average claim rate.

Size

The number of employees you have directly correlates to the cost of your business insurance. The reason? More employees equals more opportunity for injury, incident or accident.

Larger businesses can expect to pay more for business insurance than a company with few or no employees.

And businesses with no employees may be exempt from state workers’ compensation mandates, saving them costly business insurance coverage.

Payroll and sales

The expense of workers’ compensation insurance is linked to the annual payroll size, with the cost varying by state.

As per a 2021 report by the National Academy of Social Insurance, the range for workers’ comp can be anywhere from 52 cents to $1.98 per month per $100 of payroll.

In the case of general liability insurance, insurers assess the cost based on revenue.

The rationale behind this is that a higher number of customers increases the likelihood of someone getting injured or experiencing grievances.

Prior claims

A history of business insurance claims is a red flag for insurance companies. It signals your business is either inherently risky or that your company is not taking proper steps to mitigate risk.

Coverage and deductibles

The total expense of your business insurance is influenced by the payout amount and the specific situations covered by your policy.

For instance, a commercial auto insurance policy that includes comprehensive coverage will incur a higher cost compared to one with only the minimum liability coverage mandated by the state.

Similarly, a general liability policy with an aggregate limit of $2 million will carry a higher premium than one capped at $1 million.

Additionally, selecting a lower deductible will contribute to an increase in the overall cost of your business insurance policy.

Also read: How much is insurance for car rental business

How to lower the cost of your business insurance

The best way to save money on your business insurance is to have very few claims made against your policy.

Insurance companies reward businesses that are diligent about worker and customer safety but will ding those with a history of accidents, workplace injuries or negligence lawsuits.

You can often earn discounts on your business insurance if you take the following steps:

  • Bundle your coverage. Most insurance providers offer discounts if you buy several policies at once.

  • Prepay your annual premium. Your insurer may 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 offering formal safety training and keeping up with routine facility maintenance.

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