how much does business insurance cost

How Much Does Business Insurance Cost?

Business insurance is a special insurance policy designed to combine protection from property and liability risks. Usually, there are several different cover options that insurance companies offer to protect things like business premises, contents, stock and equipment, and financial loss due to business interruption.

While business insurance can be tailored to suit the individual needs of any given business, many people still need more information about the policy before they make the final decision.

In this article, we will cover some of the most important topics you need to know, including business insurance cost, how to get cheap business insurance, how much business insurance cost per month, and more.

Types of Business Insurance

Insurance companies usually offer several types of commercial insurance you can combine to get the best possible coverage for each stage of your business development.

General Liability Business Insurance

Most small businesses need this insurance. General liability protects businesses against bodily injuries, property damages, completed operations, and advertising injuries that may arise from the business.

Commercial Auto Insurance

If you use your vehicles for business, you should consider having commercial auto insurance. The policy provides liability and physical damage protection for your business vehicles and trailers. This type of insurance is especially useful if you travel between job sites or you are using your vehicles to make deliveries and transport equipment.

Professional Liability Insurance

If your business offers professional services or advice, liability protection is probably something you should consider having. This type of policy protects you against claims of professional negligence and it is also known as Errors and Omissions insurance (E&O).

Cyber Insurance

Cyber insurance protects against electronic threats, such as cyber-attacks and data breaches that are very common today. If your business stores and processes sensitive data like credit card information, this type of policy might be for you.

Business Owners Policy (BOP)

Business Owners Policy combines business liability and property coverage into one policy. This type of coverage is usually a good idea for small businesses with commercial buildings or personal property.

Workers’ Compensation

Workers’ Compensation protects you and your employees. The policy helps pay for expenses such as medical costs and lost wages related to employees who were injured on the job.

business insurance cost

How Much is Business Insurance?

One of the most common questions that business owners have is: “How much does business insurance cost?”

Here are some of the factors that can impact the cost of business insurance:

  • The Type and Number of Cover Options
  • The Nature of Business
  • The Value of the Property Insured
  • The Business Location

Each type of policy protects businesses against a different type of risk, and these differences impact the price. Here is a table that shows the median and average cost of business insurance:

Policy

Average Cost

Median Cost

Workers’ Compensation

$86/month

$80/month

Business Owners’ Policy (BOP)

$84/month

$85/month

General Liability

$53/month

$57/month

Professional Liability

$46/month

$50/month

How to Get Cheap Business Insurance?

Every business owner wants to know how to lower the price of business insurance costs. It is always a good idea to make sure you are not paying for the coverages you don’t need, but also, make sure you are not underinsured in case something bad happens.

To maximize your savings, analyze your business needs to understand what you need to protect the most. Make sure you include contractual requirements and get rid of any inapplicable coverages.

One of the best ways to save money on business liability insurance costs is to adjust your deductibles. A deductible is an amount you pay toward a covered loss at the time of a claim. Typically, the higher your deductible, the lower the cost of your annual premium. That said, you should always make sure you are comfortable paying the deductible you select.

How Much Does Small Business Insurance Cost?

Business hazard insurance is a type of small business insurance that helps you protect the property where your business operates. Another name for this type of business insurance is business property insurance.

Usually, the first insurance policy that most business owners need is general liability insurance. This is also the least expensive one. According to Insureon, in an analysis of 28,000 small business owners’ commercial policies, the median cost of general liability insurance was $42 per month or $500 per year.

Furthermore, the median cost of a business owner’s policy (BOP), which combines general liability and business property coverage at a discount, was $53 per month or $636 per year.

Small business insurance costs also mostly depend on your profession. Because general liability covers third-party bodily injury and property damage, professionals who engage with the public usually pay more for this coverage. Higher risks also mean a bigger chance that you’ll file a claim, which means higher costs for insurance coverage.

Business Insurance Cost FAQs

How is Commercial Property Insurance Calculated?

If you are looking for a commercial insurance cost estimator, here is a simple way to calculate commercial property insurance rates: you determine the value of the building and its contents and multiply that value by its risk factors. Insurance companies usually determine the value of a property by evaluating either the replacement cost or the actual cash value.

What Factors Impact Business Insurance Cost?

There are many factors that are important for calculating business insurance costs. Besides the type of policy and business location, some of the most important factors are:

  • Profession: Because not all businesses carry the same risks, those who have higher risk can expect to pay more than businesses with lower risk. For example, one of the businesses with higher risk is tree trimmers. Their work is physical and it often includes using power tools. On the other hand, professional services are exposed to a different type of risk and require professional liability coverage to keep them safe.
  • Number of Employees: Businesses that have several employees usually pay more for business insurance because their potential for claims is higher than businesses that have few or no employees. Remember that each additional employee increases exposure to accidents or other events that may result in a claim.
  • Coverage Needs: The amount of coverage you choose as a business owner impacts your premium.

What is an Aggregate Limit?

An aggregate limit is the most an insurance company will pay toward a claim during the business insurance policy term. For example, if your policy limits are $1 million/$1 million aggregate, you have coverage up to $1 million for a single accident, but no more than $1 million for the policy term. The length of your policy term depends on your carrier, but the most common are annual terms.

Do I Need Business Insurance?

If you run a business, you should consider having business insurance as it protects you against the everyday risks that come with the usual business activities. Business insurance covers accidents, theft, damage and legal fees, and mistakes that you cannot predict.

If you found this article useful, make sure you also read about Commercial Property Insurance and how to make it easier.

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