How much does small business insurance cost in the United States

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How much does small business insurance cost in the United States: Small businesses are private corporations, partnerships, or sole proprietorships that have fewer employees and/or lower annual sales than a normal-sized business or corporation.

Small businesses in many countries include grocery stores, small convenience stores, bakeries or delicatessens, hairdressers, or craft shops. Some small businesses such as daycare centres, nursing homes, and restaurants that serve alcohol may require inspection and certification by various agencies. Some freelancers such as lawyers, accountants, dentists, and doctors operate as small businesses.

Small businesses do not usually dominate their field.

The following table serves as a guide to the nomenclature of business size.

Definitions of business size (by the number of employees).

AUS US CAN EU
Minute/micro 1-2 1-6 1-4 <10
Small <15 <250 1-99 <50
Medium <200 <500 100-499 <250
Large <500 <1000 >500 <1000
Enterprise >500 >1000 N/A >1000

source: Wikipedia

– Most cells reflect quantities that are not defined in the legislation.

– Some definitions are multi-parameter, e.g., by industry, sales, or market share.

Small businesses are the cornerstone of the American economy, but it takes a lot of effort to make one successful. Small business insurance protects you from the potential liabilities that arise from these claims.

Small businesses need small business insurance to protect them from potential liabilities. Insurance can help you generate as much income as possible and ensure that your business is successful in the long run.

You may think that insurance is too expensive and you cannot afford the cost, especially in the early stages of your business. You may also think that insurance is an unnecessary expense that you can save by being extremely careful and cautious.

But this could be extremely dangerous and is not remotely worth the risk. In this guide, you will find all the information you need about small business insurance costs. After reading this guide, you can be sure that you have the knowledge you need to make a good decision on your policy.

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How much does small business insurance cost?

Small business insurance consists of plans that include certain important types of insurance to give your business the protection it needs. The cost of these policies can range from very inexpensive to extremely costly and depends on several components, such as your choice of policy, details about your business and profession, and particular risks.

Once you have considered all these factors, you can estimate the cost of your package and start looking for a policy.
Because of the many factors involved in pricing, it can be difficult to determine a price that is representative of your business and insurance needs, but here is a quick price comparison of an insurance company’s average rates for 2021 to give you an idea:

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

Other types of business insurance costs

Aside from these core policies, your business may also need other types of business insurance depending on your industry. Some industries, such as healthcare, pose more risks to the business owner and therefore require specific types of insurance. How much do these cost?

Business Insurance Type Average Cost
Professional Liability Insurance $60/Mo
E&O Insurance $144/Mo
D&O Insurance $50/Mo
Product Liability Insurance $183/Mo
Commercial Auto Insurance $62/Mo
Liquor Liability Insurance $125/Mo
Special Events Insurance $200/event
EPLI Insurance $125/Mo
Umbrella Insurance $100/Mo

 

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What affects the cost of small business insurance?

Premiums for your business can vary significantly depending on several factors:

  • Your industry
  • The nature of your business
  • Whether you are outside an officer
  • Whether your business involves travel or the transportation of your own or others’ property
  • Whether your business is a sole proprietorship, LLC, or other classification
  • The number of people you employ
  • The total salary of your employees
  • Your customer or client base
  • The insurance coverage you include in your package
  • Your coverage amounts
  • Your turnover
  • Your location
  • Years in business
  • Claims history
  • Your insurance provider
  • Your business assets such as office equipment, vehicles, and various supplies
  • The risks your business is exposed to

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Small business insurance costs by policy

While your business may have its specific risks that require additional coverage, below are costs for common policies that cover most scenarios small business owners may face. A broader range of policies that you may particularly need can be done listed below.

General liability insurance

The typical cost of general liability insurance is $46 per month but can range from $21 to $166 ($250 to $2,000 per year). The price depends on your industry, years in operation, the number of customers, revenue, and claims history.

General liability insurance protects your business if you or your employees cause damage to others, bodily injury, or similar situations. These policies cover costs associated with litigation and claims, including investigations, settlements, attorney fees, and damages.

Commercial property insurance

A typical commercial property insurance policy costs $85 per month, but rates can range from $42 to $417 ($500 to $5,000 per year). Premiums vary by location and assets.

Commercial property insurance protects your business’s property, assets, and equipment from damage, theft, and breakdown, and replaces lost revenue.

Business Owners Policy (BOP)

The typical price for a business owner’s policy (BOP) is $100 per month. Depending on assets, location, and risks, rates can range from $42 to $292 per month ($500 to $3,500 per year).

A BOP is an insurance package that combines the major insurance coverage most small businesses need. The typical business owner’s policy includes general liability and commercial property insurance.

Professional Liability Insurance

Most professional liability policies cost $60 per month. Rates range from $40 to $84 per month ($500 to $1,000 per year) depending on your industry, location, employees, coverage, and coverage amounts.

Professional liability insurance protects your business if a client or customer alleges that your service caused damage resulting in losses and decides to take legal action.

Errors and Omissions (E&O) Insurance.

Common errors and omissions insurance policies cost $145 per month. Depending on your profession, location, clients, and number of employees, premiums can range from $75 to $167 per month ($900 to $2,000 annually).

E&O insurance protects your business from claims based on negligence, errors, and omissions in the performance of your job.

Workers’ Compensation Insurance

Most workers’ compensation insurance policies are purchased for each employee and cost $38 per month. Depending on your location, your industry, and your employee’s salary, the rate per employee can range from as little as $5 to as much as $240 per month ($35 to $2,876 per year).

Workers’ compensation insurance covers medical expenses and lost wages that result from on-the-job injuries or illnesses. It protects workers so they do not have to pay for their medical expenses. It also prevents the employer from being sued for the associated costs.

Cyber Liability Insurance

A typical cyber liability insurance policy costs $92 per month. Premiums range from $63 to $667 per month ($750 to $8,000 annually), depending on factors such as risks, industry, revenue, and location.

Cyber liability insurance protects businesses from liabilities, damages, and losses related to data breaches and other cyber-attacks.

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Commercial Umbrella Insurance Coverage.

Commercial umbrella insurance is in addition to your general liability, auto liability, and business liability insurance. Your premium will largely depend on the type of business you own and the coverage you purchase. Many companies buy a standard coverage quantity of $1 million per occurrence and $2 million combined.

Insureon customers pay an average annual premium of $900 for umbrella insurance. The premium varies by industry. Building designers pay the most ($1,601), while personal care companies pay the least ($478).

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Commercial Auto Insurance

The rates you pay for commercial auto insurance depend on the type of vehicles you own and how they are used. You will pay more to insure a large truck than a private car. Insure on customers pay an average annual premium of $1,704 for commercial auto insurance.

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The average cost of small business insurance by the number of employees.

The number of employees you have in your business has a big impact on the cost of your workers’ compensation insurance. The more employees you have, the greater the likelihood of an accident happening and the greater the risk to insurers. Here is a disintegration of the variety of employees:

# of Employees Average Yearly Premium Average Monthly Premium
0 $0 $0
10 $2,652 $221
25 $3,229 $269

Small business insurance costs by occupation

The most important factor affecting the cost of insurance for your small business is your occupation. Below are some examples of policies for different industries, including their coverage and their prices.

Restaurant Insurance

Most insurance policies for restaurants cost about $300 per month. Depending on sales and location, premium prices range from $88 to $840 per month ($1,050 to $10,000 per year).

Restaurant insurance policies cover claims related to foodborne illness, damage to customers, property damage to third parties, damage to personal property, and business interruption.

Plumbers Insurance

Typical policies cost $89 per month. Depending on the service, coverage, and claims history, rates can range from $39 to $89 per month ($468 to $1,068 per year).

Plumbers insurance covers lawsuits and other liabilities arising from injuries and damages to customers, third parties, or their property while performing installations, repairs, or other services.

Retail insurance

The normal retail insurance coverage fees are $49 per month. Depending on your business, location, and coverage, premiums can range from $39 to $49 per month ($468 to $588 per year).

Retail insurance protects your business from liabilities related to damage to customers and third parties, as well as damage to your own business.

IT Consultant Insurance

The usual IT consultant policies cost $89 per month. Costs vary by provider, speciality, and client, but premiums range from $39 to $289 per month ($468 to $3,468 annually).

IT consultant insurance protects your business from third-party injuries and property damage, as well as mistakes you make that could harm a client and result in losses.

How much does small business insurance cost depending on the state?

Each state has its regulations for business insurance. Some states require workers’ compensation insurance, while others do not. Property values can also change insurance rates, sometimes significantly.

Some states have minimum coverage amounts that can vary from state to state. These factors and the highly individual nature of business insurance are why there is no overall list of small business insurance costs by state. Also, the costs for different businesses in the same state vary drastically.

To give you a general idea of how much insurance prices can vary from state to state, here are some averages for the cost business owners pay per $100 of payroll for workers’ compensation insurance:

– Illinois: $2.23

– Indiana: $1.05

– Missouri: $1.92

– Michigan: $1.57

– Iowa: $1.68

That means that for every $10,000 in payroll, an employer in Illinois pays an average of $223 – a full $118 more than Indiana.

Where can I buy business insurance?

Small business insurance companies often offer a wide range of insurance policies for different types of businesses. To find the right insurance company and coverage for your small business, you should consult a specialist. An independent insurance agent can help you find the right coverage from one of the many insurers.

However, they work for the companies. An insurance agent does the same thing, except he works for you, so that may be the best place to go. He will explain the details of the coverage you need and tell you what each insurer can offer and at what price.

You can also get a free quote from CoverWallet. CoverWallet will get quotes from different insurance companies to get you the best price!

Insureon provides you with some guidelines

If you are looking for information on the cost of small business insurance, the online insurance agency Insureon is a useful resource. The company tracks the premiums its customers pay and the insurance policies they purchase, tabulates the data, and then publishes the results on its website. You can use this data to estimate your insurance costs.

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How are you able to save money for your business insurance?

One of the easiest ways to save money on business insurance is to shop around. You can compare rates from different insurance providers to find a policy that fits your budget.

There are other ways to save money, too. Sometimes you can bundle policies to get a discount. The maximum familiar package is a business owner’s policy, which contains general liability insurance and commercial property insurance.

The amount and type of insurance you purchase will determine how much you pay. You can opt for a higher deductible or lower policy amounts to save money on your premiums.

Tips to keep your small business insurance costs down

Consider the following points to help keep your small business insurance costs down.

– Identify your risks: Thoroughly analyze your business to determine potential risks, and only purchase insurance that applies to you.

– Work with an independent broker: Small business insurance can be very complex. In addition, premiums often vary significantly between different insurance providers. An independent broker can help you navigate the industry and find the insurer that has the most experience with your industry and offers the best rates.

– Bundle your policies: most insurance companies offer discounted premiums if you combine certain policies. The most common insurance package is business owners insurance (BOP). As mentioned earlier, this usually includes important insurance such as general liability and commercial property.

– Invest in security: Often, insurers will give discounts on certain liability policies if you take certain safety precautions. Some examples include hiring security officers, installing a security system, fencing and lighting, and high-quality locks. Ask your agent to check with your provider to see what measures might be worthwhile.

– Compare quotes: The same policy can have very different prices from different insurance companies. Get quotes from at least three different providers before making a decision.

Benefits of small business insurance

A single claim can wipe out your business’s revenue or, depending on the nature of your business, your finances. Damage to your reputation from a lawsuit could cause you to lose customers or clients.

Proper insurance coverage can give you an edge over your competitors and grow your business. Knowing that you are covered against the worst-case scenario will make you and your employees feel good. You will not be too concerned with what might happen and can focus on the job at hand and providing the best service possible.

Bottom Line

Small business insurance will never be a one size fits all proposition. Every business has different needs due to the many factors mentioned above. It is important to find the right insurance for your business without spending a lot of money on it.

This is one of those cases were quickly searching for the lowest price can have unpleasant consequences later on. Take your time, make sure you understand the different coverage options and find the insurance that is best for you, at the best price, and without sacrificing coverage.

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