Small Business Insurance Cost

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Small businesses are the cornerstone of the American economy, but it takes a lot of effort to make one succeed. Unfortunately, there are any number of scenarios both within and outside of your control that can take your company down before it has a chance to thrive. That is why you need small business insurance.

You have come up with a great idea, figured out your market, written a great business plan, gotten the financing you need, and you are off to the races. When you are first starting out, your primary focus is on the business itself–making sure everything runs smoothly, bringing in as much income as possible, and ensuring that your company has longevity. While bringing in a sustainable income is often the biggest and most immediate issue facing your company, you can not ignore the many risks your business may face. Small business insurance protects you from the potential liabilities of these claims.

You may think that insurance will be too expensive and you can not afford the cost, especially early on in your business, but that is not necessarily the case. You also might believe that insurance is an unnecessary expense you can eliminate by being extremely diligent and careful, but that could be extremely dangerous and is really not remotely worth the risk.

This guide will provide you with all the information you need about small business insurance costs and, after reading it, you can be confident you have all the knowledge you need to make a great decision about your own policy.

How Much Does Small Business Insurance Cost?

Small business insurance consists of plans that incorporate certain key insurance types in order to provide essential protection for your company. The cost of these policies can range from very inexpensive to extremely costly depending on several components like policy choices, details about your business, and your profession and particular risks. Once all these are considered, you can estimate the cost of your own package, start the process of searching for a policy, and ultimately make a purchase.

What Affects Small Business Insurance Cost?

Your company’s premium rates can vary considerably based on a number of factors, including:

  • Your industry

  • The nature of your business

  • Whether you are based out of an office

  • Whether your business involves traveling or transporting your own or third-party property

  • Whether your business is a sole proprietorship, LLC, or some other classification

  • The number of people you employ

  • Total employee salary

  • Your customer or client base

  • The insurance coverage you choose to include in your package

  • Your coverage limits

  • Your sales

  • Your location

  • Years in business

  • History of claims

  • Your insurance provider

  • Your business assets like office equipment, vehicles, and various supplies

  • The risks your company faces

Small Business Insurance Cost by Policy

While your company may have its own specific risks that require additional coverage, the following are the costs of common policies that cover most scenarios that small business owners may face. A wider variety of policies you particularly may need can be found listed further on.

General Liability Insurance

Typical cost for general liability insurance is $46 per month, but it can be as low as $21 and as high as $166 ($250 to $2,000 per year). The price varies depending on your industry, years of operation, number of customers, revenue, and claims history.

General liability insurance protects your business in case either you or your employees cause third-party damage, bodily injury, or related situations. These policies cover costs related to lawsuits and claims, including investigations, settlements, legal fees, and damages.

Commercial Property Insurance

Typical commercial property insurance costs $85 per month, but the rates can range from $42 to $417 ($500 to $5,000 per year). The premiums vary based on your location and assets.

Commercial property insurance protects your company’s property, assets, and equipment from damage, theft, and breakdown, and will replace lost revenue.

Business Owner Policy (BOP)

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

A BOP is a policy package that combines key insurance coverages that most small businesses require. The typical business owner policy includes general liability and commercial property insurance.

Professional Liability Insurance

Most professional liability insurance policies cost $60 per month. The rates range from $40 to $84 per month ($500 to $1,000 annually) depending on your industry, location, employees, coverage, and limits.

Professional liability insurance protects your business if a customer or client claims your service caused damages that lead to losses and decides to take legal action.

Errors and Omissions Insurance (E&O)

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

E&O insurance covers your business from claims of negligence, mistakes, and oversights during the course of your work.

Workers’ Compensation Insurance

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

Workers’ compensation insurance covers medical costs and lost wages resulting from on-the-job injury or illness. It provides protection for employees so they are not responsible for their own medical costs. Additionally, it prevents employers from getting sued for related expenses.

Cyber Liability Insurance

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

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

Small Business Insurance Cost by Profession

The most significant factor that influences your small business insurance cost is your profession. The following are some examples of policies for different industries, including what they cover and their prices.

Restaurant Insurance

Most restaurant insurance policies cost around $300 per month. Depending on your revenue 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, customer harm, third-party property damage, personal property damage, and business interruption.

Plumbing Insurance

Typical policies cost $89 per month. Depending on your service, coverage, and claims history, rates can be as low as $39 and as high as $89 per month ($468 to $1,068 annually).

Plumbing insurance covers lawsuits and other liabilities from injuries and damage to a client, third-party, or their property while conducting installations, repairs, or any other service.

Retail Insurance

A typical retail insurance policy costs $49 per month. Depending on your business, location, and coverage, premium rates can range from $39 to $49 per month ($468 to $588 per year).

Retail insurance policies protect your business from liabilities related to harm to customers and third parties and damage to your own store.

IT Consultant Insurance

Common IT consultant policies cost $89 per month. Costs vary based on your provider, specialty, and customers, but premiums range from $39 to $289 per month ($468 to $3,468 annually).

IT consultant insurance protects your business against third-party injury and property damage, and any mistakes you make that could harm a client and result in losses.

Risks Faced by Business Owners

While the risks small business owners face are extremely varied, most insurance companies offer policies to protect them against most common scenarios. The following are examples of coverage options you may need, depending on the potential liabilities of your specific business.

Business Interruption Insurance

An accident or disaster (or pandemic) forces you to stop working and costs you a significant amount of income.

Commercial Auto Insurance

Your business-owned vehicle is stolen or damaged in an accident.

Commercial Property Insurance

Property damage from natural disasters, fires, and other covered scenarios.


Cyber Liability Insurance

Release of client information due to data breaches and other cyber crimes or attacks.


Employment Practices and Liability Insurance (EPLI)

Claims of discrimination, sexual harassment, wrongful termination, and failure to promote.

Environmental Insurance

Your business accidentally releases a toxic chemical into a river.

General Liability Insurance

Your company damages someone’s property while conducting normal business operations.

Professional Liability Insurance

A claim or lawsuit harms your company’s professional reputation causing you to lose current and/or potential future clients.


Workers’ Compensation Insurance

An employee gets sick or injured while on the job, needs rehab, and is unable to return to work for several weeks.

Tips to Keep Your Small Business Insurance Costs Lower

Keep the following in mind to help lower your small business insurance costs.

  • Identify your risks: Be sure to thoroughly analyze your business to identify potential risks and only include those insurance policies that apply to you.

  • Work with an independent agent: Small business insurance can be complex. Additionally, premiums often vary considerably between different insurance providers. An independent agent will help you navigate the industry and direct you toward the insurer with the most experience with your industry and with the best rates.

  • Bundle your policies: Most insurance companies will offer discounted premiums when you combine certain policies. The most common policy package is a business owners policy (BOP). As previously mentioned, this typically includes key insurance coverage like general liability and commercial property.

  • Invest in safety precautions: Often insurers will provide rebates for certain liability coverage when you have particular security measures in place. Some examples are employing security officers, installing a security system, fences and lights, and high-quality locks. Have your agent check with your provider about what measures might be worth taking.

  • Compare quotes: The same policy can have a very different price at different insurance companies. Be sure to get quotes from at least three different providers before making your decision.

Benefits of Having Small Business Insurance

While you might consider small business insurance an aggravating expense, the moment something goes wrong and the benefits kick in, you will be extremely thankful you made the investment.

Despite your best efforts, and being as careful as possible with both your own work and the people you hire, accidents will happen or you may make a mistake, and you could be sued and potentially found responsible for damages. Even if you win the case, you will have to pay for legal fees, which are often substantial. A single claim could potentially wipe out your company’s earnings or, depending on the nature of your business, your personal finances. Additionally, the reputational harm from a lawsuit could result in losing current customers or clients and make others think twice about your company. Small business insurance provides essential protection from these risks.

Additionally, for certain industries, coverage is required in order to get a job. Having adequate insurance may give you a leg up against competitors and increase your business. And even if you find yourself working for clients that do not require coverage, they will feel more secure working with a properly insured company.

Despite the annoyance of the cost, knowing that you are protected from the worst-case scenario gives you and your employees peace of mind. You will not overly focus on what could happen, and can concentrate on the work itself and provide the best service you can to your customers or clients.


- What is the difference between general liability insurance and professional liability insurance?

General liability insurance protects your business against claims that you or an employee caused bodily injury, property damage, or personal injury.

Professional liability insurance covers damages related to mistakes, errors, negligence, and incorrect advice related to your professional services.

- Do I need workers’ compensation insurance?

In most states, you are legally required to obtain workers’ compensation insurance if you have at least two employees. Even if it were not legally mandated, all businesses should get coverage. It makes your employees feel more comfortable and can save you from potential lawsuits.

- I think there’s a chance I could get involved in an extremely high claim that will go way beyond my policy limits. What can I do to protect myself?

Typical small business insurance policies may have certain limits and the price of raising them might be considerable. Another option is to add umbrella insurance. This policy covers damage claims above the standard limits of your policy.


While you may have thought that insurance costs are too high and might not be worth the investment, after reading this guide, the benefits should be clear. No small business, no matter the size, industry, or profession, should operate without proper coverage.

Additionally, you now have enough information necessary to choose the small business insurance plan perfectly suited for your company’s needs. By considering the details of your own business, working with an agent to identify your needs, and making sure you are covered against all potential risks, you will help give your business the best chance to succeed.

Typical cost is


Premiums vary widely based on the amount of insurance you take out as well as the profession. Basic coverage can be as low as $21 per month and as much as $667. Some businesses require multiple policies.

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