On average, business insurance costs about $450 per year with average prices ranging from $300 to $600 in the US for 2020, according to thebalancesmb.com and other sources. Depending on a couple of factors, such as your business industry, your loss record, your location, how long you’ve been in business, and where you source your insurance, may increase the cost of your business insurance.
If you’re in the market for business insurance, probably the first question you’re going to ask is, “How much does it cost?” Insurance premiums are difficult to predict since they’re based on a variety of factors. However, you can estimate your costs utilizing data available online.
How is my Premium Determined?
There are a lot of things your insurer may consider when establishing the cost you’ll pay for an insurance policy. Here are a couple of examples:
The industry and your type of business. Insurers evaluate insurance applicants on the basis of their risk of losses. Businesses that do their operations in hazardous industries create more risk, so they’ll pay more for insurance than a less risky industry.
Your loss record. A business that has had no losses will pay less than a comparable business that has an unsatisfactory loss record.
Where your business is located. Rates will differ by geographic area.
How long you’ve been in business. An established business with progressive revenue might pay less than a business that does not have a satisfactory track record.
Insurance coverage source. Many insurers charge more or less than others for comparable coverage.
Insurers use various kinds of details to price various kinds of insurance. For instance, your payroll will be used to determine your workers compensation premiums, however, the payroll has no impact on your commercial property premiums. Similarly, your property values are utilized to establish your property premium but aren’t applicable to your workers compensation premium.
Small Business Insurance Cost Differs by the Kind of Coverage
Practically all businesses are obligated to get general liability insurance to safeguard themselves against 3rd party property damage and bodily injury claims. Our customers pay an average cost of $500 for general liability insurance although the premium will differ by industry. For example, the average premium for construction industry businesses is $825. Landscapers and cleaning companies pay around $530, whereas a photography profession could only pay $275.
Your general liability premium partially depends on the limitation of insurance you purchase.
Business Owners Policy
Many small businesses purchase a business owner’s policy (BOP), a bundled policy that comprises of both general liability and commercial property coverage. Similar to general liability insurance, the premiums will differ by industry. For instance, businesses in restaurant industries spend an average premium of $1,608. Retail businesses pay about $788 whereas advisors and CPA businesses could pay only $500.
Errors and Omissions Insurance
Businesses that offer expert advice or in-depth services to others are required to have errors and omissions (E&O) insurance. Some instances are architects, structural contractors, and accountants. Many customers purchase a policy with a $1 million restriction for every incident and a $1 million combined.
Many professionals produce more or expensive claims than others. Therefore, higher risk professionals will pay more for E&O coverage than business with lower risk. Real estate businesses pay about $665 whereas accounting businesses might pay only $400.
A lot of businesses that employ workers are required by law to purchase workers compensation policies. The premium they pay for workers compensation insurance is dependent on the groupings designated to your business, the rate billed for each grouping, the payroll, and your experience converter. Rates differ greatly from state to state.
A lot of businesses pay much more for workers comp insurance. Instances are construction businesses ($3,264), landscapers ($2,769), and cleaning companies ($1,813). Many businesses spend less than the average. Instances are IT companies ($436) and CPA firms ($396).
Commercial umbrella coverage sits-on-top of the general liability, your auto liability, and employer’s liability coverage. When in the market for an umbrella, find a policy that offers both excess restrictions and more immense coverage than the main policies. The premium you’ll end up paying for an umbrella is widely established by the type of your business and the limit you buy.
The premium differs by industries. Building designers spend the most ($1,601) whereas a personal care business spends the least ($478). A lot of businesses buy standard limits of $1 million per incident and $2 million combined.
According to Insureon, “An umbrella with a $2 million limit typically costs 25% more than a policy with a $1 million limit. The cost of a $3 million umbrella is more than 110% of the cost of a $1 million policy.”
The rates you’ll end up paying for commercial auto insurance depends on the kinds of vehicles you own and how they’re used. You’ll pay more for insuring a large truck than you would for a private passenger vehicle.
- Bonner, Marianne. “How Much Does Business Insurance Cost?” The Balance Small Business, The Balance Small Business, 8 Jan. 2020, www.thebalancesmb.com/what-is-the-average-cost-of-small-business-insurance-4172224.
Business Insurance Quotes
From offering liability protection to you and your employees to helping you get reimbursed for business property damage, business insurance provides many types of coverage. Learn more about Business Insurance Coverage or get a free business insurance quote from Klimes Insurance today.