Regardless of the industry, small businesses need to protect their business and assets. While small business insurance may seem like a burden, it is an important part of doing business. But how much should you pay for employment insurance? And how can you ensure that your investments protect you properly?
Your small business insurance costs will vary based on factors such as your preferred type of coverage and industry. If you’re looking for small business insurance, knowing some common rates for your line of business can help you navigate the different quotes you receive to choose the best policy and company for you.
What is small business insurance?
Small business insurance can include many types of policies that protect a company’s employees, assets, income, and intellectual property. Business property insurance, commercial income insurance, and general liability insurance are some of the examples that fall under the general umbrella of small business insurance.
Many insurance companies will offer joint coverage, which is important for multifaceted companies. You may need to protect your assets, employees, customers, and income. One of the most popular common policy options includes a business owner policy (BOP), which typically includes property and liability coverage.
The importance of small business insurance
Accidents happen, so prepare for them legally and financially with proper insurance – you could end up in some dangerous hot water if you don’t.
Perhaps, an employee gets hurt at work. Or perhaps, a customer slips and falls in your store. In such cases, you need to cover their injuries with workers’ compensation or public liability policies.
The risks are not limited to physical injuries. For example, a company could take some pictures from an internet search for in-store signage – only to be hit with a copyright claim for using the pictures without the express permission of the company behind the pictures.
A number of other potential unfortunate scenarios—such as your business being robbed or your storefront damaged in a natural disaster—are entirely possible. And you’ll likely need a small business insurance for those, too.
How much does small business insurance cost?
The extent of insurance coverage for your small business depends on the specific needs of your business. For example, a single owner may not need workers’ compensation coverage, while a business owner with a storefront and multiple employees will.
Average cost of small business insurance
The average cost of small business insurance is around $400 to $800 per year or $34 to $67 per month — but as you can assume, buying more coverage will make you incur additional costs.
For example, you might invest in a business owner policy that costs $100 per month and add general liability coverage that runs you $50 or $60 per month.
Small business insurance costs by type
Different types of insurance offer different protections, but they can also vary in price. Some insurance policies cover intellectual property or income, while others protect your physical assets or provide coverage for bodily injury. Here are some common categories of small business insurance:
- General liability: General liability covers business in liability cases of property damage, bodily injury, defamation, or libel and typically costs about $40 a month.
- Professional Responsibility: Professional liability, also called errors and omissions insurance, covers your business if your company makes a mistake or has omissions. This costs about $60 a month.
- Employer Policy: A BOP, which typically includes ownership and liability policies with optional add-ons, will cost about $50 to $100 per month.
- Workers’ compensation: This policy will cover your employees’ medical costs and lost work wages due to work-related injuries or illnesses. Workers’ compensation costs about $50 per month but may be more expensive depending on the location.
- Data breach insurance: Data breach insurance or cyber liability insurance will provide coverage for expenses related to data breaches and cyber attacks. This important policy is around $100 to $150 a month.
- Commercial Vehicle Insurance: If your business has company cars for employees to drive, you must have cars that are insured. Commercial auto insurance costs about $150 per month but varies by location.
Examples of Insurance Costs for Small Businesses
Job insurance is important. For example, you might pay $50 or more per month for workers compensation, but the average workers compensation claim could be around $40,000.
An annual investment of $600 could save you thousands if someone gets hurt around the clock. Injuries such as burns — common in restaurants — can cost nearly $60,000 in claims, which are covered by workers compensation policies.
Commercial auto insurance is another important policy for companies that have vehicles that employees use to perform work. Many work injuries result from car accidents, with average claims of about $80,000.
Next, consider data breach insurance. You may think you can skip this extra cost, but this policy can save you a lot of time and money. For example, a hacker might remove your entire tech suite, rendering you unable to function.
If your business is the victim of a ransomware attack, hackers may hold your website or your records hostage until you pay thousands of dollars. Not to mention that a data breach could cost the company more than $200 for each stolen record.
Small business insurance costs by state
Businesses in densely populated areas or places prone to natural disasters are more likely to pay for policies than in rural locations with lower incidences of floods, hurricanes, or wildfires. Here are some average business general liability insurance costs based on location.
- California: $55 a month
- Colorado: $53 a month
- Florida: $58 a month
- Georgia: $69 a month
- Illinois: $46 a month
- New York: $65 a month
- Oregon: $48 per month
- Pennsylvania: $60 a month
- Texas: $59 per month
- Virginia: $35 a month
Small business insurance costs by industry
High-risk companies will have higher insurance costs. For example, a brick-and-mortar store or small construction company will have more risks than a sole proprietor who acts as a freelance copywriter. Here are some average monthly premiums for an employer’s policy across various industries.
- Cosmetics and salons: 550 dollars per month
- Opposite: 700 dollars per month
- Retail: 800 dollars per month
- Real estate: 600 dollars a month
- Construction and landscaping: $900 per month
- marketing: 300 dollars a month
- Freelance writer: $130 per month
- Resturant: 1000 dollars a month
Protect your business with Small Business Insurance
You’ve worked hard to grow your business, but even one small disaster can cost you thousands and derail your progress. In extreme situations, a major accident or lawsuit could cost you your business.
Although business insurance is an additional expense, it is an important investment to protect your business, employees, customers, property, and income. Regardless of your industry, investing in small business insurance is in your best interest.