As a business owner, you want to be sure you’re spending your money wisely. The first rule of thumb is to find out how much something costs before you commit to buying it. So, you’re wise to wonder, “How much does business insurance cost?”
The answer to that question depends on a few factors. Let’s look at some of the factors that go into how much business insurance costs and some examples of what a hypothetical small business might pay for insurance.
What is the cost of small business insurance?
Every business is unique, so not every business will pay the same amount for business insurance. The best way to find out how much it will cost to insure your business is to get a quote.
Here are some starting monthly premiums for the most common business insurance policies.
| Business insurance policy | Monthly cost starts at* |
|---|---|
| Business owner's policy (BOP) | $42 |
| Cyber security insurance | $30 |
| Errors and omissions insurance | $23 |
| General liability insurance | $30 |
| Professional liability insurance | $23 |
*Costs shown are illustrative. Your premium may vary based on your business profile.
What determines how much business insurance costs?
8 Factors that go into the price of business insurance
- Type of coverage. Not all businesses need the same type of coverage, and many businesses may need more than one policy. The two most common kinds of business insurance are general liability and professional liability. General liability covers someone else’s claims of bodily injury or property damage. Professional liability, or E&O insurance, covers errors and omissions you may make when you provide a professional service. There are other types of coverage, such as cyber security insurance and business owner’s policies. Each of these policy types is priced individually.
- Policy limits. Higher coverage limits will increase the premium because the insurer takes on greater financial risk. While lower limits can reduce premiums, it may also leave your business underinsured, so be sure you’re purchasing adequate coverage.
- Revenue. A business with higher revenue can be viewed as a bigger target for liability claims, leading to increased premiums.
- Deductibles. A deductible is the amount of money you have to pay before your insurance policy kicks in. The higher the deductible, the lower the cost of the policy because you are paying more of the cost of the claim.
- Endorsements. You can get endorsements, or riders, on your policy if your business faces specific risks. Some endorsements require an additional premium.
- Industry. Some types of businesses are inherently riskier than others, so insurance companies charge a higher premium. For example, a construction business may be more likely to have a claim than a consulting business.
- Size. A larger business with many employees may be more likely to have a claim than a sole proprietor who brings in less revenue. Therefore, a larger business may pay more.
- Location. Insurance rates are regulated by each state’s department of insurance, so rates will vary from state to state.
How much can I expect to pay for business insurance?
Since there are a lot of variables, the best way to find out how much insurance will cost for your business is to get a quote. But for general information, here are some examples of what businesses could pay for insurance.
Home health aide
Texas
$250,000 annual revenue
| Policy | Claim limit | Deductible | Monthly premium* |
|---|---|---|---|
| General liability | $1,000,000 | $0 | $324.37 |
| Professional liability | $1,000,000 | $500 | $170.60 |
| Cyber security | $250,000 | $10,000 | $33.90 |
| Total monthly premium | $528.87 |
Personal trainer
Illinois
$125,000 annual revenue
| Policy | Claim limit | Deductible | Monthly premium* |
|---|---|---|---|
| General liability | $1,000,000 | $0 | $33.32 |
| Professional liability | $1,000,000 | $500 | $81.97 |
| Cyber security | $250,000 | $10,000 | $26.91 |
| Total monthly premium | $142.20 |
Photographer
Kansas City, Missouri
$250,000 annual revenue
| Policy | Claim limit | Deductible | Monthly premium* |
|---|---|---|---|
| Business owner's policy | $1,000,000 | $0 | $50.40 |
| Business property | $25,000 | $1,000 | (included in BOP) |
| Professional liability | $1,000,000 | $500 | $75.30 |
| Cyber security | $250,000 | $10,000 | $29.57 |
| Total monthly premium | $155.27 |
*Costs shown are illustrative. Your premium may vary based on your business profile.
How to keep business insurance costs down
There are two ways you can reduce the amount of money you will pay for an insurance policy. You can choose a lower limit, meaning the maximum amount insurance will pay for a single claim or for the policy term. For example, a policy with a $2,000,000 limit will likely cost more than one with a $500,000 limit.
The other way to reduce your premium is to choose a higher deductible. If your deductible is $10,000, meaning you pay the first $10,000 of each claim, you will likely pay less than if your deductible is $500.
Consider the size of the largest claim you can imagine someone making against your business and use that to determine what your limit should be. Then think about how much you can pay out of pocket before insurance covers the rest. This will help you decide on a deductible. A licensed Hiscox agent can help you answer these questions. To talk with one, call 1-866-283-7545, Monday – Friday, 7am – 10pm ET; Saturday – Sunday, 8am – 5pm ET.
Why do small businesses choose Hiscox?
- Flexible payment options: We offer you the option of making monthly payments (with no additional fees) to help you manage your cash flow.
- Tailored insurance: We specialize in businesses like yours and tailor coverage to the risks in your field.
- Claims responsiveness: When a covered claim is reported, Hiscox will promptly assign a dedicated claims representative to assist you.
- Coverage for contracts: Our general liability insurance coverage satisfies most standard contract insurance requirements.
- Passion for service: Agents knowledgeable about your business concerns will provide you with excellent service—customers rated us 4.7/5.
This information is provided to assist you in understanding the coverage we offer and does not modify the terms and conditions of any insurance policy, nor does it imply that any claim is covered. Coverage is subject to underwriting, terms, conditions, and limits of the policy, and is not available in all states or classes of business. Actual cost, commission, premium, and coverage may vary subject to Hiscox’s acceptance of the unique considerations of each individual risk, the information provided to Hiscox, and subject to required underwriting and rating factors. Coverage is made available through Hiscox Inc. d/b/a Hiscox Insurance Agency in CA, which is licensed in all states. The products described are underwritten either by Hiscox Insurance Company Inc., a Chicago-based insurer that is licensed in all 50 states and DC, or a Hiscox Syndicate at Lloyd’s, London, which is available on a surplus lines basis through licensed surplus lines brokers. The publication and delivery of this information is not intended to be a solicitation by Lloyd’s for the purchase of insurance on any US risk.