How much does business insurance cost?

Before we give you the answers about the cost of business insurance, think about how much it would cost if you didn’t have insurance.

There are business insurance benefits that far outweigh the cost. And the cost factors depend on the types of business insurance you need.

Let’s detail the types and average insurance costs for small businesses.

How much does business insurance cost?

Choosing the right type of insurance is an important part of the process. Start by making a list of your risk exposure.

Do customers often visit your company? Does most of your business take place online? Do you operate from your home? Do you need to insure vehicles? Do you have employees?

Every business situation is different. Let’s look at the basics:

Professional liability insurance costs

Professional liability insurance is also known as errors and omissions. This type of small business insurance is necessary for owners who provide professional services such as accountants, dietitians, financial advisors, lawyers, and more.

Average Monthly Cost: $50

General liability insurance costs

You need general liability insurance if you have products. Someone could be injured by your product, or your product could cause personal or property damage. General liability charges may vary depending on the policy limits for how much coverage you need.

Your general liability insurance also covers you if a client or customer sustains injury during the normal course of business at your business location.

Average Monthly Cost: $50

Employee compensation costs

If you have employees, work accident insurance is a legally required business insurance policy, regardless of your number of employees, one or 50. It is a small business insurance cost that cannot be avoided. If you have employees, they may have accidents at work. Workers Comp insurance covers you if an employee suffers bodily harm and claims related to medical expenses.

Average Monthly Cost: $78 per month, or $900 per employee.

Insurance costs for commercial real estate

People who run a business from home often overlook commercial real estate insurance. Most basic homeowner insurance policies do not cover the cost of specific business equipment you have in your home, such as computers, software, and manufacturing equipment.

If you own or rent a location for your business, commercial property insurance covers you for business equipment, as well as stored inventory/products. Coverage also includes physical damage to the actual building. Costs vary widely depending on the type of business. For example, the insurance rates for a specialty paint manufacturer will be different than the average cost of an annual premium for a clothing manufacturer.

In addition to working with hazardous substances (such as flammable paint and glue), there are other factors that determine whether your company has a higher business risk.

Average Monthly Cost: $100 to $2,000.

Business Owners Policy BOP

An entrepreneur’s policy allows you to combine general liability insurance, professional liability insurance and commercial real estate insurance. Increasingly, an insurance company can combine more coverage by adding cyber liability insurance to you to provide more comprehensive coverage.

The typical price of a BOP is less than the total of the policies if taken separately from an insurance company.

Average Monthly Cost: $300 to $3,500

Cost of cyber liability insurance

If you are a small business owner who conducts every aspect of your business electronically, you need this type of insurance. If you have a data breach, you can post customer information — such as payment details, addresses and phone numbers, etc. — on the Internet.

Cyber ​​liability coverage includes the cost of recovering data and recovering your system. It also helps you pay the legal fees if you are sued for a data breach.

Average Monthly Cost: $145

Cost umbrella insurance

In addition to a BOP, an insurance company may offer a CPO or a commercial property owner’s policy. Small business owners who have a fleet of vehicles choose this type.

The CPO includes business property insurance, but also allows you to “umbrella” commercial auto insurance. Many factors influence the amount of the annual premium, such as the number of vehicles, the use of the vehicles and the size of the vehicles (for example, van or tractor-trailer).

Average Cost: $1,000 to $3,000 per year per $1 million valuation; smaller businesses can expect to pay about $700 a year.

Commercial auto insurance costs

Do you use your personal car for your business? In other words, is the family minivan used to deliver candles or cupcakes, etc.?

You must track your mileage as a business expense. You need to determine how much of your annual mileage is personal and how much is commercial to determine whether or not you need a commercial auto policy.

If you don’t have a commercial car and you have an industrial accident, you may have some explaining to do.

Average monthly cost: $140, depending on vehicle type.

disability insurance

Often overlooked, getting disability insurance can be one of the wisest financial decisions you’ll make. Some of your business expenses are covered if you are injured or become ill. This is an important insurance policy for anyone who could be seriously injured on the job, such as contractors, landscapers, etc.

The annual costs are usually about 4% of your income.

Danger Insurance

This is another insurance policy that is often overlooked. Often, commercial real estate policies (as well as homeowners’ policies) do not cover natural disasters such as hurricanes and earthquakes.

Also, commercial real estate insurance may not cover the exterior of your business, such as signage and landscaping. Hazard Insurance picks up on that slack.

Average Monthly Cost: $60-$200

Factors Affecting Small Business Insurance Costs

Here are factors that affect small business insurance costs:

Company AssetsNumber of EmployeesHistory of ClaimsProfessional Services OfferedGeography/LocationNumber of Years in BusinessType of BusinessCar Insurance Need Home or Physical LocationType of Coverage Needed

How to Reduce the Cost of Small Business Insurance Premiums?

Many business owners have gotten smart about ways to save money on business insurance coverage. And that brings us to our first tip on how to cut costs.

Get expert advice from other small business owners Group policies under one umbrella Take steps to minimize risk Save by adding security measures such as alarm systems and updated software.

Choosing the right insurance company for your business

While many insurance companies offer free estimates, your time is not free. It is likely that you could literally spend hours researching various insurance companies.

Try reducing your search by:

List the types of business insurance coverage you need. Network with other small business owners. Work with an independent insurance agent or insurance company with experience in small business insurance, who can wade through the choices and report back to you.

Image: Depositphotos

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