The cost of small business insurance can vary widely based on several factors. Insurance providers consider various elements when determining the premium for a small business insurance policy. Here are key factors that can influence the cost:

What Is the Average Cost of Business Insurance?

The most popular type of insurance for small business owners is a Business Owner’s Policy (BOP), which costs most customers $85 a month.1 This combines business property and business liability insurance into one policy. A BOP helps cover claims of bodily injury or property damage. This policy also includes coverage if your business can’t operate due to a fire, theft or other covered disasters. This list can help you see the average costs that business owners paid for different coverage with The Hartford:

  • Business Owner’s Policy (BOP): Average Annual Premium: $1,019; Average Monthly Premium: $85
  • General Liability Insurance (GLI): Average Annual Premium: 805; Average Monthly Premium: $67
  • Workers’ Compensation Insurance: Average Annual Premium: $1,028; Average Monthly Premium: $86
  • Factors That Can Affect the Cost of Small Business Insurance

The cost for small business insurance coverage varies based on your company. In fact, many factors impact the amount you’ll spend on small business insurance, including your:


Certain industries have higher risks than others. So, you may find your insurance rates reflect that increased risk. For example, construction companies will likely pay more for business insurance than an accounting firm.

Number of Employees

Certain types of business insurance can use the number of your employees as a factor for insurance cost, like general liability insurance.


Costs for certain types of insurance coverage can depend on your business’ payroll. Workers’ compensation, for example, uses payroll as a factor for the premium amount.

Claims History

A business with a clean claims history demonstrates safety and experience. This can result in a lower insurance cost. You can request an insurance loss run report to view the number of past claims.

Coverage Limits

The limits on a small business insurance policy can range broadly. One of our specialists can work with you to determine what your coverage range should be. Most liability policies have two limits: a per-occurrence limit and a aggregate limit. Your per-occurance limit is what your insurer will pay, up to a certain point, to cover any single claim. Your aggregate limit is the set amount for which your insurer will pay to cover claims within the lifetime of the policy (typically one year).

When purchasing a policy, you should consider what you are able to afford to pay out of pocket if a claim occurs. You will want to select coverage limits that will allow you to afford your deductible and use your insurance.

Cost Factors for General Liability Insurance

Our customers paid an average of about $67 a month for general liability insurance.2 Also known as business liability insurance, it helps cover claims that your business caused bodily injury or property damage.

Remember, rates vary and it’s no different when it comes to general liability insurance costs. This includes your:

  • Sales: The more customers your business has, the more risk you face for claims. This can increase your general liability insurance cost. But if you keep a safe area for your customers, it can prevent claims and keep your insurance costs down.
  • Industry: More hazardous industries need risk management. This can lead to higher costs.
  • Location: Being in a more populated area can increase your risk of customer injury. So, your insurance rate may increase.
  • Cost Factors for Workers’ Compensation Insurance
  • According to our policy data, most of our customers with less than $300,000 in payroll pay an average of $86 a month for workers’ compensation insurance. This is a coverage that most states require.3 It helps your employees recover from a work-related injury or illness.

The factors that insurers use to determine your workers’ compensation cost include your:

  • Type of work: Certain types of industries put employees at a higher risk of injury or illness.
  • Claims history: Even if your business has only a few workers’ comp claims, it’s likely that you operate a safe workplace. So, this can lower your workers’ comp cost.
  • Payroll: Your cost is calculated per $100 of payroll. So, the larger your payroll, the higher your costs.
  • Cost Factors for Professional Liability Insurance
  • Professional liability insurance helps protect you from claims that your business made a mistake or error in the professional services given. Some factors that can impact your professional liability insurance cost include your:

Number of employees: In most cases, businesses with more employees pay higher premiums for professional liability coverage.

Exposure to risk: If your business offers higher priced services or handles high value assets or sensitive information, you can expect to pay more for a professional liability policy. This is because of the greater potential for claims.

To get an accurate estimate of the cost of small business insurance, business owners should work with insurance professionals, provide detailed information about their business, and request quotes from reputable insurance providers. Comparing quotes and understanding the specific terms and conditions of each policy are essential steps in finding the most suitable and cost-effective coverage.

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