Business insurance cost for a small business is what you pay in premiums in order to financially protect your company from the unexpected, such as property damage, liability claims, data breaches or employee injuries. When you have insurance, your business can weather unexpected events without catastrophic financial implications.
The rates differ widely based on your industry, location, revenue, amount of employees and options for coverage. For example, general liability costs as little as $42 per month for a home-based consultant but can rise to just shy of $145 monthly for a tech startup with employees seeking cyber insurance.
In the guide below we explain average cost of business insurance for a small business, share what factors impact pricing and give tips on how to find inexpensive but good coverage.
Why Comparing Small Business Insurance Policies Matters
How to compare insurance quotes is necessary since premiums may be drastically different among insurers. The Hartford, Progressive and Liberty Mutual may charge different rates for the same coverage.
Benefits of comparing policies:
· Find savings with packaged or adjusted coverage
· Don’t pay for worthless endorsements or add-ons
· Make sure you’re getting proper coverage that’s specific for what your business does
Pro Tip: Do not forget to review endorsements, exclusions, and policy limits. The least expensive policy isn’t always the best if it leaves you gaps in coverage.
What insurance typically covers for small businesses
Insurance typically includes general liability, property damage and business owner’s policies. E&O or professional liability might demand tail coverage. Workers’ compensation, commercial auto, cyber insurance and umbrella/excess liability are all coverages that address specific risks.
How insurers calculate business insurance pricing using industry data
Insurers use class codes, and factor in payroll, revenue, location and claims history when pricing premiums. Information from Insureon and Progressive can set expectations. Agents and marketplaces can leverage this data to provide accurate quotes reflecting your business’s risk.
Average costs for common small business insurance policies
The numbers below show what small business insurance costs for solo operators and microfirms. Medians come to the rescue by discarding outliers. This should be the median you use to compare quotes from Insureon, Progressive or The Hartford.
General liability insurance costs small businesses a median of about $42 per month, according to the Independent Insurance Agents and Brokers of America. This is for those having one to four employees and relatively small revenue.
The average cost of BOP insurance is approximately $57 per month, or $684 annually. It packages liability and property protection for easier coverage and lower premiums.
Professional liability, or E&O, runs about $61 a month for small consultants. Workers’ compensation will generally cost about $45 per month, but could be $80 for riskier setups.
The average cost of commercial property insurance is around $67 per month. Commercial umbrella insurance is there to add higher limits, and will generally cost you an additional $75 per month for additional liability layers.
Cyber insurance is more costly, with medians of about $145 a month. This demonstrates why there is a requirement for dedicated breach response and notification providers.
Here’s a quick look at median price points. Figures reflect small, low-revenue operations. Costs will jump with higher payroll, wider revenue, riskier industry or increased limits
| Policy | Median Monthly | Median Annual | Notes |
| General liability | $42 | $500 | Common baseline for small firms with limited exposures |
| Business owner’s policy (BOP) | $57 | $684 | Bundles liability and property for small operations |
| Professional liability / E&O | $61 | $732 | Typical for consultants and service professionals |
| Workers’ compensation | $45 | $540 | Varies by state, payroll, and job class |
| Commercial property | $67 | $804 | Protects buildings, equipment, and contents |
| Commercial umbrella | $75 | $900 | Provides excess liability limits above primary policies |
| Cyber insurance | $145 | $1,740 | Higher due to breach response and liability trends |
Insureon’s medians come from over 40,000 customers. They reflect typical exposures for sole proprietors and small teams. Progressive’s 2024 medians show a spread across products, with professional liability near the low end and workers’ comp toward the higher end.
The Hartford says sample prices are educational. They depend on underwriting rules, state differences, and policy language. Use median data to form realistic expectations, then get tailored quotes based on your industry, payroll, and limits.
Remember, small business insurance cost rises with staff size, revenue, risky operations, and higher limits. Medians give a starting point for budgeting and comparison, not a guaranteed price for every company.
Key factors that drive the cost of business insurance for a small business
Premiums are influenced by many things. Insurers look at industry risk, location, payroll, revenue, and years in business. Knowing these can help small business owners save money without losing protection.
Industry and profession risk profile
Some jobs have more claims and bigger losses. Contractors, tree services, food service, healthcare, and financial advisors often pay more. This is because of risks like bodily injury and property damage.
Location, state rules, and cost-of-living impacts
Where a business is located matters a lot. High-crime areas, expensive labor, and places prone to disasters increase costs. State laws also affect workers’ comp rates and what coverages are needed.
Number of employees and payroll-related costs
More employees mean more risks. Each new employee raises costs for workers’ comp and general liability. Even a few new hires can significantly change insurance costs.
Revenue, business size, and time in business
Higher revenue means more to insure, which raises costs. New businesses often pay more because insurers don’t know their loss history. But, firms with a clean record and long history can get lower rates over time.
How insurers classify businesses and why class codes matter
Insurers group businesses to set fair insurance prices and guess risks. Getting it right affects how much you pay for insurance. It also impacts audits and underwriting.
Agents use class codes and payroll to find the right risk group for your business.
General liability class codes and industry groupings
General liability class codes sort businesses into clear groups. For example, consulting firms are in low-risk codes. But construction, retail, and food services are in higher-risk codes because of more physical danger and customer contact.
Companies like The Hartford and Progressive use these codes for quotes. The right code keeps insurance prices fair.
Workers’ compensation classification of employee job duties
Workers’ compensation classifies jobs by risk. Clerical jobs usually have lower rates than trades. Payroll by class code is key in premium calculations.
Clear job descriptions and payroll details help avoid quoting mistakes. Insureon says accurate entries make quotes better and avoid audit surprises.
How misclassification can affect premiums and audits
Wrong class codes or unclear job duties can lead to audits and higher bills. A misclassified employee can put your business in a higher risk group, raising insurance costs.
Keep job logs, payroll records, and equipment lists handy. Accurate records help underwriters and keep insurance prices steady.
Strategies to lower small business insurance costs without underinsuring
Small-business owners can save money without losing coverage. They can achieve this by being smart and managing their risk. Compare premiums of policies to get the one that’s right for you.
Purchasing coverages together: BOPS and package policies at a discount
A Business Owners Policy (BOP) packages coverages together and can save you money. Insurers including Progressive and The Hartford offer discounts for bundling. Compare prices to see savings.
Risk management: safety programs, security systems, and loss control
Solid safety programs and physical controls reduce claims. This can lead to lower rates. Arc Electronics, this term appeared in the opinions of two other district courts that cleaned up after themselves without really providing us with a definition. [9] Common examples of “measures” were given in Morgan Crucible as employing security cameras and training personnel.
Adjusting deductibles and selecting appropriate limits
Increasing deductibles can lower premiums. But be sure you can pay the deductible. Select limits that reflect those risks to keep your insurance as affordable as possible.”
Pay-in-full discounts and multi-year stability
Paying annually can save money. Insurers like long-term customers. Search for discounts on upfront payment and stable policies.
Practical checklist for immediate savings
- Request multiple quotes through agents and online marketplaces using accurate revenue and payroll figures.
- Ask carriers which business coverage types you truly need and remove redundant endorsements.
- Document safety and loss-control upgrades to present to underwriters at renewal.
- Compare package pricing versus separate policies to find the most affordable small business policies.
Work with a broker to find the best deals. Regularly review and adjust your coverage to keep costs down.
How to compare policies and get accurate quotes
To compare business insurance, you need clear data. Begin with basic information, such as revenue and payroll and equipment values. And obtain class codes, property values and claims history. One single complete application makes it easy to get quick, accurate quotes from companies such as Insureon and Progressive.
What insurers need for precise quotes
Insurers are going to need precise numbers for your revenue, headcount and payroll. They also require major equipment value. Provide your values for property and business classification code. Be sure to include any previous claims, safety programs and certifications. Failure to provide specific pieces of information, or to make the fact that something has happened readily apparent, can increase premiums and delay the process.
Using agents, brokers, and marketplaces
Collaborate with a licensed agent or independent broker to contrast carriers. Agents employed by Progressive, or independent brokers who aren’t married to a particular insurer, can put in just one application at platforms like Insureon. That way, you can put competing offers up against each other. Marketplaces do show you pricing and coverage, ensuring you won’t end up with too little insurance for your money.
Reading policy language: exclusions and endorsements
Don’t just look at the price. Read the policy language carefully. Look for exclusions, endorsements, definitions and conditions. Check the per-occurrence and aggregate limits, and what is covered. And consider whether property is valued at replacement cost or actual cash value, too.
Practical comparison checklist
· Get financials, payroll and equipment lists upfront before you ask for quotes.
· Ask for sample policy forms and the actual language of endorsements.
· If clients need proof, request certificates of insurance from carriers.
· Compare caps, deductibles and exclusions — not just price.
· Record loss control initiatives; safety procedures may reduce commercial insurance costs.
If you follow these steps, you will be able to compare insurance quotes successfully. There are gaps that affect pricing and even the negotiation of better deals. This leaves you with cheap insurance, but not at the expense of protection.
Conclusion
Understanding the cost of business insurance for small business holders is essential. These are good starting points, with market medians from Insureon and Progressive. For instance, general liability is approximately $42/month and BOP about $57/month.
Other kinds — for example, E.&O., workers’ comp and cyber insurance have their own prices. The cost is subject to change depending on your industry, location and other variables.
For good prices, check and compare quotes from multiple sources. This involves agents, intermediaries and online portals. Be sure to provide accurate information, like your business’s revenue and payroll.
You can save money by packaging policies and making your business safer. But keep in mind, don’t sacrifice your coverage for this.
Always read your policy carefully. Find any exclusions or special rules. Request copies of policy forms. Use the median prices as a jumping-off point, and then use a few quotes targeted to your business.
FAQ
How much should small business insurance cost?
Many small businesses pay a bit each month. According to insureon, general liability starts at around the $42 per month. On average, business owners’ policies range from $57/month and errors & omissions is at about $61/month.
Operators are pricer to insure as well as workers’ compensation and cyber protection. They are about $45/month and $145/month, respectively. These figures reveal what insurance is — or should be — costing most low-risk businesses.
How much does $1,000,000 general liability insurance cost?
For a 1,000,000 per-occurrence / 2,000,000 aggregate limit, Insureon’s median is near $42/month. Your actual cost will depend on class code, state rules, and claims history. Use this as a starting point when comparing prices.
How much does insurance cost for an LLC?
Premiums are calculated based on the size, payroll and risk of an LLC. LLCs with a single owner tend to pay less than those that have many employees. You pay for more work and duties. To get a rough idea, collect numbers for payroll, revenue and property values before getting quotes.
How much is a $2 million dollar insurance policy for a business?
Going from $1M/$2M to $2M/$4M increases costs, but the math is not direct. On Insureon, median general liability runs about $46/month for the higher limits. This is how costs stack up with higher limits but continue to be affordable for a majority of people.
Here’s a quick comparison to show typical costs and how limits affect them.
| Coverage | Common Limit | Insureon Median Monthly |
| General Liability | $1M / $2M | $42 |
| General Liability | $2M / $4M | $46 |
| Business Owners Policy (BOP) | Package limits vary | $57 |
| Errors & Omissions (E&O) | Professional limits vary | $61 |
| Workers’ Compensation | State-based | $45 |
| Cyber Liability | Varies by exposure | $145 |
For a more detailed quote, request custom pricing. Brokers and carriers have some discretion to adjust prices according to your particulars. This gives you a cost that is realistic for your operation.
