The average cost of business insurance is determined by a number of variables, such as the coverage you need, the number of employees, the industry, and, of course, its location. But let’s find out, in reality, how much insurance typically costs for a small business and how you can cut down on these costs. We will also cover the different kinds of insurance, the variables that affect premiums and pinpoint tricks on how to get the best coverage at an affordable price.
How Much Does It Cost For Business Insurance
The cost of business insurance varies as a result of certain factors that are directly and indirectly related to the business. However, a small business should expect to spend $240.15 or more on monthly basis.
Average Cost For Business Insurance
The following are the various types of insurance coverages that business needs as well as how much it cost to get them on average.
#1. General Liability Insurance Cost
Every business insurance policy will be incomplete without general liability insurance. A business general liability insurance shields you from legal action stemming from claims that your company was responsible for. Most insurers allow business owners to add product liability to this particular policy. If someone is hurt on your property or if you cause damage to someone or their property, you won’t have to worry about legal repercussions, because your general liability insurance will cover it.
What’s The Cost Of Getting The General Liability Insurance For My Business?
On average, the cost of getting general liability insurance for a small business is $30. Depending on the nature and size of your business, you pay from as little as $20 to as high as $100 or more.
Are There Factors That Influence The Cost Of your Business General Liability Insurance?
Yes, there are several factors that affect the cost of your business general liability insurance but, we will highlight five of these. These are claims history, location, building size, policy details, annual revenue, and the size of payroll. We’ll buttress these below;
Location
Location influence the cost of general liability insurance in two ways. The first is the cost of living and the second is the risk involved in that locality. Generally, companies in areas with higher crime rates may pay more premiums than others in safer localities. Also, businesses in places with higher often pay more than others.
Size Of Business Structure
Insurers believe that businesses with a bigger structure are more prone to encounter accidents and thus, demand for claims than other businesses with smaller buildings. Consequently, your insurer may require you to pay more premiums than others in such situations. They generally have this ideology that you deal with more customers and this increases the likely occurrence of the risk.
Policy Details
The premium you pay for business insurance is influenced by factors like coverage limits, deductibles, and deductible amounts.
Number of Employees And Annual Income
Liability insurance premiums tend to increase in tandem with a business’s operational expenses and capital expenditures.
Claims History
Insurance costs may go up if you have a history of filing claims for general liability.
#2. Cyber Liability Insurance Cost
If your company suffers a data breach, such as the loss or theft of sensitive customer information, the premiums you pay for this coverage will go toward repairing the damage.
With cyber liability insurance, a company is safeguarded from the financial consequences of cybercrime. Cyber insurance can protect your company against the financial fallout of a cyberattack, including the expense of repairing or rebuilding your company and any related legal bills or settlements.
What Is The Average Cost of Getting a Cyber Security Insurance?
On average, a small business should expect to pay $122.85 per month to get cyber security insurance coverage.
Are There Factors That Affect Cyber Security Insurance?
Of course, there are several factors that influence the cost of getting cyber security insurance coverage for your small business and these include the following; Type of industry, annual cost, and revenue, claims history, number of persons that have access to the database, network security, and so on.
Claims History
Most insurer assesses your previous claims and used this to determine your premium. If you’re getting this for the first time, they weigh other risks and use it to measure the claims you may likely get.
Number of Persons That Have Access To Your Database
There may be a correlation between the number of access privileges and the cost of insurance.
Company’s Income and Expenditures
Costs associated with cyber insurance generally increase in proportion to a company’s revenue, expenses, and operating costs.
Industry
Companies with greater vulnerabilities to cyber attacks may require more extensive insurance coverage, which typically comes with a higher price.
Network Security
Your vulnerability to cyber claims might increase or decrease depending on how well you protect your networks.
#3. Workers Compensation Insurance Cost
If an employee has an injury or illness on the job, they may be eligible for benefits under workers’ compensation insurance. Many jurisdictions mandate this sort of protection for companies that employ people.
What is the Average Cost of Getting workers’ Compensation Insurance Coverage For My Business?
On average, a small business with a few staff should expect to pay $50 per month. It can range from $40 – 100 or more depending on several factors.
Are There Factors That Influence The Cost Of Getting Workers’ Compensation Insurance For My Business?
Yes, they are as follows; Location, Employee job duties, and Payroll size.
Payroll size
The cost of workers’ compensation insurance is typically proportional to the size of the company and the size of the payroll.
Location
The location simply means the law protecting workers in your state.
Employee Job Duties
Workers’ compensation premiums for desk jobs, for instance, are typically cheaper than those for more physically demanding professions like construction and repair.
#4. Business Interruption Insurance Cost
There are situations that force a company to temporarily close its doors, business interruption insurance can help make up for lost revenue and cover ongoing expenses. For instance, the covid lockdown affected some businesses and cause them to short down completely. The Business Interruption Insurance Cost provides coverages in such situations. Examples of include the loss of the following; revenue, mortgage, lease, rent, loan, tax, payroll, relocation, and training expenses.
Are There Factors That Influence the Cost Of Business Interruption Insurance Cost?
Of course, there are factors that affect the cost of your business Interruption Insurance Cost and these includes industry, revenue, and property value.
Industry
The type of industry is also a factor that directly influences the cost of business interruption cost insurance coverage. Of course, you weren’t expecting a construction firm will pay the same premium as a clothing line were you? That’s impossible.
Revenue
The larger the company’s revenue, the higher the premium for business interruption insurance, as the policy’s cost is directly proportional to the amount of revenue lost.
Your Business’s Property Value
The cost of business interruption insurance tends to increase in proportion to the value of your commercial property.
What Is The Average Cost Of a Business Interruption Insurance Cost?
On average, businesses can get business interruption insurance cost coverage of between $35-$140 on monthly basis.
#5. Commercial Property Insurance Cost
Having commercial property insurance helps safeguard the physical location of your business as well as any machinery or tools housed there. Therefore, commercial property insurance can help cover the price of replacing stolen business computers if a burglar breaks into your building. To avoid financial catastrophe in the event of a fire, natural disaster, theft, or another calamity, it is wise to invest in commercial property insurance.
What’s The Cost Of Getting Commercial Property Insurance Cost?
On average, the cost of getting commercial property insurance for a small business is $63. But then, it ranges between $40-$85 per month.
Are There Factors That Influence The Cost Of Commercial Property Insurance?
Of course, there are factors that influence the cost of getting a business commercial property insurance and some of these are; Location, type of perils, cost of equipment, building age and size, type of fire protection, and so on. We will buttress these below;
Cost Of Equipment
The cost of your commercial property insurance policy can go up if your business keeps pricey equipment on the premises.
Location
Premiums can rise if a business is located in a high-risk area that is prone to natural disasters.
Fire Protection Involved
Your premiums could go down if you have a sprinkler system, smoke detectors, and quick access to the fire department.
Size And Age Of The Building
It costs more to insure an older or larger building than it does a smaller or newer structure.
Additional Perils
You might expect to spend extra for business insurance if you want to include coverage for things like floods, earthquakes, and employee theft, just as you would for your house.
#6. Inland Marine Insurance Cost
If your business is something that demands to ship or moving to make or receive supplies, you need this. If something were to happen to your company’s goods or property while moving it, inland marine insurance would cover the costs. This includes items in transit to or from your company, as well as any personal property you utilize in the course of your work.
What Is The Cost Of Getting an Inland Marine Insurance?
On average, a small business can get the Inland Marine Insurance coverage for as low as $14 per month.
Are There Factors That Can Affect Inland Marine Insurance?
Yes, there are factors that affect the cost of getting the inland insurance coverage for your businesses and that is the cost of the product or equipment and how frequently you actually transport the items.
What are The Factors That Can Affect The Cost Of Business Insurance?
There are several factors that can affect the cost of business insurance. This includes but is not limited to the following number of employees, location, industry, and so on.
Number of Employees
As a general rule, the cost of business insurance will be influenced by the number of its employees. Although the state mandates employers to get employer identification numbers, they also have to get employees’ liability coverage too. And a business with 20 employees will pay to have a lower insurance cost compared to a business with 200 employees or more. Generally, insurance costs will increase as the number of people working for it grows. Your company’s insurance premiums may fluctuate widely depending on the number of people working for you. Moreover, having more workers raises a company’s risk of lawsuits from employees injured on the job.
Location
The average cost of your business insurance can be significantly affected by its location. For instance, businesses in the same industry but in different locations can have different premiums.
Industry
Generally, industry type is one of the key factors that influence the cost of your business insurance. Insurers will naturally charge more for the risk that is posed by some businesses. What you sell could also have a bearing on the importance of different types of insurance. For instance, construction companies will generally pay more than a clothing line.
Payroll and Sales
While payroll relates to workers’ compensation, insurers use the income to evaluate the risk for general liability insurance. Workers’ compensation premiums are proportional to the amount of your company’s payroll. Generally, the average cost of this should be between 70 cents and $2.25 per month, per $100 of payroll.
Previous Claims
Insurance providers will look at a company with a claim history. It’s a warning indicator that either your organization isn’t adequately addressing risks in your business or that the business itself is fundamentally dangerous. And if your claim history is high, it simply means your premium will be high.
Coverage and Deductibles
The premiums you pay for commercial insurance will be impacted by the maximum benefit and the conditions under which it will be paid out.
What Trick Can You Use to Get Cheap Insurance for Your Business?
Finding ways to reduce expenses can be beneficial to the bottom line of any company, no matter its size. Businesses embrace anything that’s cost-effective, and therefore, they will embrace any possible means of getting affordable insurance premiums. So, obtaining more cost-effective insurance protection can release capital that can be put to better use within an organization.
#1. Highlight Your Insurance Needs
Every insurer wants to sell their policies, so they will keep marketing diverse offers to you. However, having your insurance needs at the back of your heart ensures that you get what you need.
#2. Do Not Just Buy, Shop Around, And Compare Rates
Do some price comparison shopping before buying a policy. For instance, insurer A may offer employees liability insurance at a higher price than insurer B. So long as they offer the same protection, go for the cheaper one. Making sure your business is getting the greatest value on insurance coverage is not that difficult. Just simply compare quotes from multiple insurances.
#3. Combine Your Insurance Policies Into One Convenient Package
The next trick is to bundle your policies into one. Insurance companies often provide discounts for purchasing many policies from them at once (sometimes referred to as a company owner’s policy).
#4. Choose a greater deductible
This is one of the reasons why you should compare prices. For instance, bundling your insurance policies into one package with insurer A may be more affordable than that of insurer B. The truth is, it’s possible to reduce your company’s insurance premiums by opting for a higher deductible in the event of a claim. However, you should beef up your company’s emergency reserve so you can weather any financial storms that may come your way.
#5. Make Upfront Payment
The last trick on our list is to pay upfront. Paying your insurance premium all at once each year could save you money compared to spreading the cost out over 12 monthly payments.
What Type Of Insurance Do I Need For My Small Business?
#1. General Liability Insurance
Every business insurance policy will be incomplete without general liability insurance. A business general liability insurance shields you from legal action stemming from claims that your company was responsible for. Most insurers allow business owners to add product liability to this particular policy.
#2. Business Income Coverage
Business Income coverage covers losses incurred as a result of natural disasters, burglaries, and the like. If you are unable to operate your business as a result of covered property damage, business income coverage (often referred to as business interruption insurance) can help you make up for the lost revenue.
#3. Professional Liability Insurance
If your company offers professional services, it is important to get professional liability insurance to protect against claims arising from errors in those services. This is also called professional indemnity insurance and helps with the price of defending your company against a lawsuit.
#4. Workers’ Compensation Insurance
If an employee has an injury or illness on the job, they may be eligible for benefits under workers’ compensation insurance. Many jurisdictions mandate this sort of protection for companies that employ people.
#5. Commercial Property Insurance/ Hazard Insurance
Having commercial property insurance helps safeguard the physical location of your business as well as any machinery or tools housed there. Therefore, commercial property insurance can help cover the price of replacing stolen business computers if a burglar breaks into your building.
#6. Commercial Auto Insurance
If you or an employee are involved in an accident while driving a corporate car for business purposes, commercial auto insurance can assist pay for any resulting medical bills and repairs to the vehicle.
#7. Data Breach Insurance/ Cyber Security Insurance
If your company suffers a data breach, such as the loss or theft of sensitive customer information, the premiums you pay for this coverage will go toward repairing the damage.
#8. Employment Practices Liability Insurance/ Employers’ Liability Insurance
The employment practices liability insurance offers protection against claims arising out of employment-related claims. For instance, an employee may sue an employer for wrongful termination, discrimination, and so on. General liability insurance does not cover such costs, but employers’ liability insurance does.
#9. Business Owner’s Policy (BOP)
A business owner’s policy (BOP) is more like a semi-umbrella insurance policy because it bundles your policy together. It usually includes general liability insurance, commercial property insurance, and your business income insurance. Most often, it’s more affordable than getting the coverage separately.
Final Thought
It’s possible for businesses in the same industry in the same industry to have different insurance. And this is because of the variable factors that distinctly affect the cost of insurance premiums.
Related Articles
- WHAT ARE INSURANCE PREMIUMS? Types & How It Is Determined
- BEST UMBRELLA INSURANCE: 2023 Best Umbrella Insurance Options
- WHAT IS BUSINESS STRATEGY: Definition and How To Develop OneWHOLE VS TERM LIFE INSURANCE: Which is Better?
- HOW TO CALCULATE MILEAGE: How to Calculate Reimbursement 2023
References
