how much does small business insurance cost?
small business insurance cost

How much does small business insurance cost? This is the question a lot of small business owners ask and seek answers to. To people who don’t understand the dynamics of insurance, especially business insurance, the thought of insurance sends shivers down their spine. The thought of paying heavily, for insurance premiums pushes them to ignore insurance and therefore take dangerous risks. But are insurance policies really exorbitant?

After I had gotten tons of questions on this, I decided to address it and give business owners seeking business insurance the much-needed insight on what to expect when purchasing an insurance policy.

How Much Does Small Business Insurance Cost?

Statistics show that, on average, small business insurance costs about $85 to $180 monthly, depending on the coverage you are purchasing. Also, business insurance often varies owing to some factors that insurance providers consider before pricing insurance coverage for different businesses. 

As a small business owner, you would get business insurance policies at cheaper rates than those of larger corporations. This is because the risk profile that small businesses have is low compared to that of larger companies. Despite having lower risks, small business owners should be more willing to buy insurance policies because they have a greater tendency to fold in the event of a major crisis. All the same, for large or small businesses, the cost of business insurance varies and is not static. These factors play role in determining the cost of small business insurance for different businesses

Note that when it comes to understanding business insurance costs, It’s equally pertinent to read reviews on different insurance companies, get their quotes online, and compare.

What Are the Factors to Be Considered for Small Business Insurance Costs?

  • Industry: Different businesses render different services, therefore, different businesses run at different risk factors. Businesses that involve higher risks would most likely pay higher than others.
  • Location of Business: Location can make the cost of insurance high or low.
  • Previous Claims History: If your business has filed claims in the past, the insurance company providers’ might consider it. In the case where your company has been sued over time for similar mistakes in your services, you may be charged higher premium rates.
  • Number of Employees: Insurance providers believe that the more employees a company has, the higher the risks involved. This means that a company with many employees stands the chance of paying higher than companies with a small number of employees
  • Higher Income: A company that generates higher revenue has more to protect in case of destruction. This is one of the factors insurance providers consider when charging businesses for insurance coverage

How Much Does Small Business Insurance Cost per Month?

It’s understandable to be curious about the price of insurance policies if you wish to get one. If you know what to expect before you get a quote from an insurance company, you will be better prepared and less likely to be overcharged. For that, people have carried out research on what small business insurance is most likely to cost after all or most of the factors have been considered.

The table below shows the average cost of business insurance coverage per month.

S/N Type of coverage Average  Cost per month

1 General liability insurance $65-$88
2 Workers’ compensation insurance $70-$111
3 Commercial auto insurance $135-$188
4 Professional liability insurance $56-$117
5 Business owners’ policy $99-$261

The Small Business Insurance Cost Calculator

If you want to buy a business insurance policy, you need to give the insurance company some information so they can figure out how much your policy will cost. As stated earlier, the cost of business insurance is dependent on some factors, and basically, these factors are equal to the calculator. Hence, they aid the insurance providers in calculating the cost of the insurance policy you wish to buy. The type of coverage you are purchasing is the most vital in this exercise.

Does that mean you have to know the type of coverage your business requires? Yes. Knowing the type of coverage your business requires will help you a lot in buying only the necessary coverage, which will save you a lot of money. Therefore, before purchasing an insurance policy, it’s important that you research the different types of coverage and the one your business needs.

Other criteria needed in calculating your business insurance rate;

  • Location of your business
  • Type of business
  • Number of employees
  • Claim history
  • ZIP code
  • Type of coverage you want

Types of coverage; businesses that need it.

General liability insurance: This type of insurance is very vital for almost every business. It covers property damages and bodily injuries to third parties in your company. This is something that every business is prone to.

Professional liability insurance: This insurance policy is suitable for businesses that render services. If an unsatisfied customer files a lawsuit against your company, this insurance will cover it. Without this insurance, your business may lose a lot of money if your client happens to win.

Commercial auto insurance: This is only needed by a business that uses vehicles. If your company has a company car or van that aids the smooth running of your business activities, then you should consider getting a commercial auto insurance

Business owners’ policy: This policy combines business interruption insurance, general liability, and commercial property insurance under one umbrella. You should only purchase a business owner’s policy if your business requires the three insurance policies in it, if not you can purchase the ones you need individually. However, one advantage of purchasing the business owner’s policy is the lower cost.

Small Business Insurance Costs in the UK

In the UK, the average cost of business insurance is about £118 per annum.  This is for public liability insurance.

Depending on various factors, this cost will vary.

The average cost of other insurance coverage in the UK includes;

  1. Employers liability insurance (£61- 200)
  2. Professional indemnity insurance(£85-£1000)
  3. Business interruption insurance cost(£85-£1000)
  4. Legal cost insurance(about £70)
  5. Commercial vehicle insurance(£2000)

Note the disparity in the names of this insurance coverage from the terms used in the US.

Why Does My Business Need Insurance?

Risk is a significant part of businesses. Some of these risks can put us right out of business if we don’t have a backup, which is why you need insurance. Insurance will basically be a financial backup for your business just in case it faces a huge financial challenge that threatens its existence.

Is Business Insurance Required by Law?

In some regions, certain insurance policies are required by law. For instance, in various states and regions, commercial auto insurance is required by companies that own vehicles. In the same vein, companies that have employees are required, by law, to purchase workers’ compensation insurance.

How Can I Save Money When Purchasing a Policy?

For small businesses that wish to purchase more than one insurance policy, the price can be overwhelming. However, there are ways to save money when purchasing insurance policies.

For example, you could ask your agent for a discount. Most insurance companies give discounts especially to customers buying more than one insurance policy. Also, you should consider buying an insurance bundle like BOP. This will save you extra costs. You should equally make enough research in order to choose the insurance company with the best rate.

How Much Does a Certificate of Business Insurance Cost?

The certificate of business insurance is free. When you purchase insurance coverage, a certificate is given to you to prove that you are insured.

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