How Much Does Small Business Insurance Cost? Have you looked into the cost of small business insurance? If you have, then you are just like me and you need this article. There was a time I was searching for this, but unfortunately, I did not actually get what I was looking for.
So I decided to do some thorough research and guess what I found out? The real information. So I have actually gotten what I wanted and decided to share it with you guys so you can get to know all about it too.
How Much Does Small Business Insurance Cost?
Here is an overview of what I will be explaining today:
Type of policy
The average monthly cost
Average annual cost
General liability insurance
Commercial property insurance
Inland marine insurance
Cyber liability insurance
Business interruption insurance
Total average cost:
General Liability Insurance Coverage.
General liability insurance simply protects you from lawsuits or claims if someone gets injured on your property or you are responsible for damaging someone else’s property. It normally costs around $30 a month, based on a recent Hiscox study. The study also found that a percentage of 95% of business owners pay less than $50 a month and only 1% pay over $100.
What Factors affect General Liability Insurance Premiums?
Here are four factors that influence general liability insurance premiums the most:
- Building size. Bigger buildings simply invite more opportunities for accidents to take place or happen. So if you simply operate in a larger facility with more foot traffic, you could then pay more.
- Businesses that are operating in high-risk areas with higher crime rates may have to pay more for liability insurance.
- Size of payroll and annual revenue. The higher your expenses or operating costs, the more you can expect to pay for liability insurance.
- Claims history If you have had general liability claims in the past, it could even increase your premiums.
- Policy details Coverage limits, deductibles, and some other policy details affect your business insurance costs.
Commercial Property Insurance Cost
Commercial property insurance also protects your business from losses in the event of a fire, natural disaster, theft, or some other problems.
The median cost of commercial property insurance is about $63 a year, according to Insureon. This is for a standard of about $60,000 in coverage limit with a $1,000 deductible.
Research has it that almost half (42%) of business owners pay between the amounts of $46.67 and $83.33 a month for commercial property insurance, while 16% pay less than $46.67.
What factors affect commercial property insurance costs?
Here are factors that can influence commercial property insurance costs:
- Operating in a high-risk area simply prone to natural disasters can even increase premiums.
- Building age and size. Insuring older or larger buildings will cost more than insuring smaller or newer buildings.
- Types of fire protection. Having a sprinkler system, fire alarms, and easy access to a fire department may even reduce the price of your premiums.
- Equipment costs Commercial property insurance reimburses you for items lost or damaged on your property, so you should expect to pay more if you own expensive equipment.
- Types of perils covered. Similar to home insurance, you will simply pay more if you need to cover additional perils for your business, such as floods, earthquakes, or employee theft.
Business Interruption Insurance Cost
If your business must be temporarily closed due to a loss covered by your policy, business interruption insurance surely helps to replace your income losses and also pay operating expenses during that time. This then includes lost revenues, mortgage, lease or rent payments, loan payments, taxes, payroll, relocation costs, and also training costs.
According to research, the average cost of business interruption insurance is between $40 and $130 per month, or $500 and $1500 per year.
What Factors affect Business Interruption Insurance Costs?
Here are the 3 main factors that will influence business interruption insurance costs:
- Since business interruption insurance simply covers lost revenue, the higher the company’s revenue, the higher the insurance premium will even be to cover that.
- Industries, like restaurants, are more likely to simply experience property damage and also pay a higher business interruption insurance premium.
- Your business’s property value. Generally, the higher the value of your commercial property, the more you will be able to pay for business interruption insurance.
Inland Marine Insurance Costs
Inland marine insurance simply protects your business if something happens to your property or products while in transit. This could include goods shipped to or from your business, as well as property used for work (such as lawnmowers or camera equipment).
According to Insureon, the median cost of inland marine insurance is $14 per month or $169 per year. This is for a $5,000 coverage limit.
Research has it that a $5,000 coverage limit is simply the most popular choice among its customers for those in the landscaping, cleaning, installation, and construction industries.
By comparison, photographers and videographers normally choose an $86,000 policy limit (which has a $580 median annual premium), while architects and even engineers purchase higher coverage limits.
What Factors Affect Inland Marine Insurance Costs?
There is also one primary factor that simply influences inland marine insurance: equipment or product costs. Small business owners who then need to transport expensive equipment or products can expect to pay higher premiums.
Cyber Liability Insurance Cost
Cyber liability insurance also protects a business from financial losses that may occur as a result of a cyberattack. This type of insurance can simply cover the costs associated with repairing or rebuilding your business after a cyberattack, as well as legal fees and settlements.
According to AdvisorSmith, the average cost of cyber liability insurance is about $123.75 per month or $1,485. per year. But companies can then pay as little as $650 a year or as much as $2,357, depending on their industry.
For instance, AdvisorSmith found out that companies in the payment processing, financial services, investment services, law, and insurance industries simply pay the most for cyber insurance. Companies in the transportation and logistics, administrative services, manufacturing, auto dealerships, and even construction industries pay the least.
What Factors Affect Cyber Liability Insurance Costs?
Here are some primary factors that impact cyber insurance costs:
- Companies that are more exposed to cyber risk might then need policies with higher coverage levels and, therefore, higher premiums.
- Your company’s revenue and costs. The higher your revenue, expenses, and operating costs are, the more you can expect to pay for cyber insurance.
- Your network security. Strong network security practices, or a lack of them, actually impact your risk of cyber claims.
- The number of people who simply have access to your systems and data also increases. More access rights might even mean more risk, resulting in higher premiums.
- Your claim’s history Past cyber insurance claims might then impact future cyber insurance premiums.
Workers Compensation Insurance Cost
Workers’ compensation insurance is also a type of insurance that simply helps employees who get injured while working. The insurance company also helps pay for medical expenses and lost wages, among other things.
The average cost of workers’ comp insurance is about $70 a month or $840 a year for businesses with less than $300,000 in payroll costs, according to The Hartford.
In most states, you are then legally required to have workers’ compensation if you have at least one employee. But workers’ comp laws simply vary by state. For instance, it’s not required if you simply operate in Alabama with less than five employees or in Arkansas with less than three employees. Workers’ comp insurance is also not required in Texas or Wyoming.
What Factors Affect Workers’ Compensation Insurance Costs?
Here are three main factors that impact costs for workers’ comp:
- Payroll size The larger your company and the bigger your payroll size, the more you can simply expect to pay for workers’ compensation insurance.
- Employee job duties. Expect to pay more for employees who simply have riskier job duties. For instance, workers’ comp costs for office jobs will then be lower than for hands-on jobs like construction or mechanic work.
- If you simply live in a monopolistic state, such as North Dakota, Ohio, Wyoming, or Washington, you are required by law to buy state-funded workers’ comp. You have no other options. But in other states, you can simply shop around for workers’ comp quotes on the private market.
For all the six types of policies above, expect to pay around $340.75 a month total, or $4,090 a year on average.
How to Lower Business Insurance Costs
Business insurance is simply an important way for you to protect a company from costly damage. It can also be a significant expense, especially for small businesses.
One of the best ways you can simply save is by purchasing a business owner’s policy (BOP). A BOP bundles three essential coverage types: general liability insurance, commercial property insurance, and business interruption insurance. It’s normally cheaper to buy a BOP rather than three separate policies.
Here are some more tips to simply lower business insurance costs:
- Shop around and also compare quotes from multiple insurance companies.
- Bundle multiple policies together from the same insurer, such as property and liability insurance.
- Should simply pay your premiums annually instead of monthly.
- Raise your deductible—if you can then afford the out-of-pocket costs you would pay to file a claim.
- Avoid risks that can simply lead to a claim.