Starting and running a business comes with risks—from customer injuries and property damage to lawsuits and cyberattacks. That’s why one of the most common questions entrepreneurs ask is: how much is insurance for a small business?
The cost of small business insurance depends on many factors, including your industry, business size, location, and the type of coverage you choose. In this complete guide, we’ll explain average small business insurance costs, break down different policy types, and share expert tips to find affordable small business insurance without sacrificing protection.
What Is Small Business Insurance?
Small business insurance refers to a set of policies designed to protect business owners from financial losses caused by accidents, legal claims, property damage, or employee injuries.
High-CPC keywords like small business insurance cost, commercial insurance for small business, and business insurance quotes online are frequently searched by business owners looking for reliable coverage at a reasonable price.
How Much Is Insurance for a Small Business?
On average, small business insurance costs between $50 and $120 per month, or around $600 to $1,500 per year. However, some low-risk businesses may pay less, while high-risk industries may pay significantly more.
Average Small Business Insurance Cost Breakdown
| Insurance Type | Monthly Cost | Annual Cost |
|---|---|---|
| General Liability Insurance | $40 – $75 | $500 – $1,000 |
| Business Owner’s Policy (BOP) | $60 – $120 | $750 – $1,500 |
| Professional Liability Insurance | $50 – $100 | $600 – $1,200 |
| Workers’ Compensation Insurance | $70 – $150 | $900 – $2,000 |
| Commercial Property Insurance | $60 – $100 | $700 – $1,200 |
| Cyber Liability Insurance | $40 – $90 | $500 – $1,000 |
Factors That Affect Small Business Insurance Cost
1. Type of Business
Businesses in high-risk industries such as construction, restaurants, and manufacturing pay higher premiums than low-risk businesses like consulting or IT services.
2. Business Location
Insurance costs vary by state and city due to legal regulations, crime rates, and natural disaster risks.
3. Number of Employees
More employees mean higher risk exposure, especially for workers’ compensation insurance.
4. Annual Revenue
Higher revenue usually results in higher insurance premiums.
5. Coverage Limits & Deductibles
Higher limits increase premiums, while higher deductibles can reduce monthly costs.
Types of Insurance for a Small Business
1. General Liability Insurance
Cost: $40–$75/month
Covers third-party injuries, property damage, and legal expenses.
High-CPC keywords:
- general liability insurance for small business
- small business liability insurance cost
2. Business Owner’s Policy (BOP)
Cost: $60–$120/month
Combines general liability and commercial property insurance at a lower cost.
3. Professional Liability Insurance
Cost: $50–$100/month
Also called errors and omissions insurance, ideal for service-based businesses.
4. Workers’ Compensation Insurance
Cost: $70–$150/month per employee
Required by law in most states, covering employee injuries and medical costs.
5. Commercial Property Insurance
Cost: $60–$100/month
Protects buildings, equipment, and inventory.
6. Cyber Liability Insurance
Cost: $40–$90/month
Covers data breaches, hacking, and cybercrime losses.
High-CPC keyword: cyber insurance for small business
How Much Is Insurance for a Small Business Per Year?
Most small businesses pay between $600 and $3,000 annually. Below is a general estimate by business type:
- Freelancers & Consultants: $400–$900
- Online Businesses: $500–$1,200
- Retail Stores: $800–$2,500
- Restaurants: $2,000–$6,000
- Contractors: $1,500–$5,000
How to Get Cheap Small Business Insurance
1. Compare Insurance Quotes Online
Always compare multiple small business insurance quotes to find the best price.
2. Bundle Your Policies
A Business Owner’s Policy (BOP) is cheaper than buying policies separately.
3. Increase Your Deductible
Higher deductibles lower your monthly premium.
4. Reduce Business Risks
Safety measures, employee training, and cybersecurity tools can lower costs.
5. Choose Only Essential Coverage
Avoid unnecessary add-ons that increase your premium.
Best Small Business Insurance Companies
Some top providers known for competitive pricing and strong coverage include:
- Hiscox
- Next Insurance
- The Hartford
- State Farm
- Nationwide
These companies offer flexible commercial insurance for small business owners.
Is Small Business Insurance Required?
While not always legally required, small business insurance is often mandatory if:
- You lease commercial property
- You have employees
- You work with corporate clients or government contracts
Even when not required, insurance protects your business from major financial losses.
Is Small Business Insurance Worth the Cost?
Yes. A single lawsuit or accident can cost thousands of dollars. Paying a small monthly premium can save your business from financial ruin.
Without insurance, you risk:
- Expensive legal fees
- Medical claims
- Property damage costs
- Business closure
Final Thoughts
So, how much is insurance for a small business?
For most businesses, it costs between $50 and $120 per month, depending on your industry, location, and coverage needs.
Choosing the right small business insurance policy is a smart investment that protects your income, assets, and reputation. Always compare quotes, understand your risks, and select coverage that fits your budget and business goals.
