How much does small business insurance cost?

If you want car insurance that pays for a wide range of damage, you have to pay more for it. The same rule applies to business insurance. If you want a policy that covers more expensive accidents and lawsuits, expect to pay more than you would for basic coverage.

General liability insurance is an occurrence-based policy. It pays for losses that occur during the policy period and has two limits:

• Per-occurrence limit. The insurer will pay up to this amount to cover claims related to a single incident.
• Aggregate limit. During the lifetime of the policy (usually one year), the insurer will pay up to this amount to cover claims.

The limits can run from $250,000 to $2 million and more. Most Insureon customers choose $1 million / $2 million general liability insurance limits.

Professional liability or errors and omissions insurance (E&O) policies are claims-made and only cover claims filed while your insurance is kept active.

When buying a policy, it's a good idea to make sure the deductible is something you can easily afford. If you can’t pay for it in a crisis, your insurance won’t activate to cover your liability claim. The average deductible that Insureon customers select for general liability insurance is $500.

The right amount of insurance coverage depends on your business needs. You want coverage that'll cover a potential lawsuit, without buying more than you need. Chat with a licensed insurance agent if you're unsure which limits are right for your business.

When deciding how much to charge for a policy, your industry is a top consideration for insurance companies. Insurers take into account any risks that might increase the chance of an expensive claim, such as hazardous machinery that could injure workers, or a greater likelihood of malpractice lawsuits.

Businesses in high-risk industries are more likely to file an insurance claim, which results in higher premiums. Here are a few examples:

• Businesses that engage with the public typically pay more for general liability insurance, which covers third-party bodily injuries and property damage. That means general liability insurance costs are higher for retailers, but lower for consultants who work on their own.
• Similarly, commercial auto insurance costs depend on the type of driving you do. Trucking businesses can expect to pay more for this coverage, as opposed to small businesses that own a company car.
• Professional liability insurance costs depend on the type of professional services or advice you provide. If other businesses like yours have a history of claims, that means increased costs for your business too.
• Healthcare and finance businesses that store medical records, credit card numbers, or other personal information may pay more for cyber insurance, which covers costs in the event of a data breach or cyberattack. This is also true for IT consultants and other tech companies that need a specialized form of this policy, technology E&O, to protect against data breach lawsuits.
• Retailers, restaurants, and others that depend on a physical location to conduct business face bigger losses in the event of a forced closure from a fire or storm, which is why they can expect higher premiums for business interruption insurance.

You might also run into insurance requirements for your industry. For example, businesses in the construction and cannabis industries are often required to carry general liability insurance.

Learn more about recommended insurance policies and costs for your industry:

The factors listed above aren't the only ones that affect the cost of small business insurance. Insurers will also look at:

• Business property. The premiums of policies that cover property damage and theft primarily depend on the value of the insured property and its condition, such as inventory, equipment, and your building if you own it.
• Business income. In general, businesses with higher revenue incur more risks and pay more for insurance. For example, a manufacturer that expanded its factory and hired more people would see an impact on its general liability and workers' comp rates.
• Number of employees. With more employees comes a higher risk of work-related accidents and associated medical expenses.
• Types of business insurance purchased. Different policies come with different costs, with general liability insurance being the most affordable policy.
• Business experience. The longevity and financial stability of your business will be noted by the insurance company in setting your premiums, as more experience within your industry can often mean less risk.
• Business structure. Whether your business is classified as a sole proprietorship, limited liability company (LLC), or S corporation can impact how much coverage you need and your subsequent insurance costs.
• Claims history. A history of claims will drive up your insurance rates, which is why risk management is essential.

Business insurance companies offer a variety of products for different premiums, which is why it's important to compare their offerings. You could contact each individually—but it's faster and easier to work with an insurance agent or broker, like Insureon.

With Insureon, you can fill out our easy application to get quotes from top-rated insurance companies. A licensed insurance agent will help you find coverage that matches your risks, at a price you can afford.

In addition to shopping around, there are a few other ways to save money on business insurance:

• Choose cheaper options. You can opt for a higher deductible or lower coverage limits to save money on your premiums.
• Pay the annual premium. Insurance companies often offer a discount when you pay the full yearly amount instead of the monthly premium.
• Manage your risks. Installing a security system, providing equipment like goggles and gloves, and eliminating clutter can reduce your risk of accidents and lawsuits.
• Bundle policies. A BOP isn't the only option. Some professionals can combine general liability and professional liability insurance for a discount, or buy errors and omissions and cyber liability insurance together.