Small business insurance is a must-have for any business owner who wants to protect their assets and keep risks as low as possible. But the cost of insurance for a small business can vary a lot depending on things like the size of the business, the industry it is in, and the types of coverage it needs. In this article, we’ll talk about how much insurance for a small business usually costs and what factors can change that cost.
Things that affect how much small business insurance costs
Several things can affect how much small business insurance costs, such as:
How big the business is
One of the most important things that affects how much small business insurance costs is the size of the business. The cost of insurance goes up the more coverage a business needs and the bigger it is. Small businesses that have fewer employees and make less money will usually pay less for insurance than larger businesses.
Industry
Insurance costs can also be affected by the type of business and the industry it is in. Some industries, like construction or health care, are thought to be riskier than others. These industries may need more coverage, which can lead to higher premiums. Insurance costs may be lower for businesses that work in low-risk fields, such as retail or professional services.
Location
Insurance costs can also be affected by where the business is. Businesses in areas with a high crime rate or a high risk of natural disasters may have to pay more for insurance than those in areas with a low risk of crime or natural disasters.
Coverage Type
How much insurance costs can also depend on what kind of coverage you need. General liability insurance, which covers damage and injuries to third parties, is usually less expensive than more specialized coverage like professional liability or cyber liability insurance.
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How much does insurance for a small business cost?
The cost of insurance for a small business can vary a lot depending on the above factors. Here are some average costs for common types of small business insurance, though, to give you a rough idea:
Liability insurance for everything
General liability insurance is one of the most common types of insurance for small businesses. It covers damages and injuries to third parties. General liability insurance can cost anywhere from $400 to $2,000 per year, depending on the size of the business, the industry, and the location.
Liability insurance for professionals
Professional liability insurance, which is also called “errors and omissions” insurance, protects a business or its employees from claims of negligence or mistakes. Depending on the size of the business, the industry, and the location, professional liability insurance can cost anywhere from $500 to $3,000 per year.
Insurance for workers’ compensation
When an employee gets hurt or sick on the job, workers’ compensation insurance pays for their medical bills and lost wages. Workers’ compensation insurance costs can be very different depending on the type of business and how big it is. For example, a construction company may pay $10,000 or more per year for workers’ compensation insurance, while a small retail store may pay $500 or less.
Insurance for cyber liability
Damages and losses caused by cyber attacks or data breaches are covered by cyber liability insurance. Cyber liability insurance can cost anywhere from $1,000 to $7,500 per year, depending on the size of the business, the industry, and the amount of coverage needed.
The policy for business owners (BOP)
A business owner’s policy, or BOP, is a package of insurance policies that usually includes general liability insurance, property insurance, and insurance for when your business has to close for a while. Depending on the size of the business, the industry, and the location, a BOP can cost anywhere from $500 to $3,000 per year.
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How to lower the cost of insurance for a small business
Small business insurance is important, but there are a number of ways for business owners to save money on insurance:
Browse around
Business owners should get quotes from multiple insurance companies and compare them to find the best coverage at the best price.
Look at the risk
Taking a look at the risks the business faces can help figure out what kind and how much coverage is needed. By focusing on the areas with the most risk, business owners can make sure they have enough coverage without paying too much for coverage they don’t need.
Make deductibles higher
Insurance premiums can go down if the business pays more out of pocket before the insurance kicks in. This is called the deductible. But business owners should make sure that they can pay the deductible if they need to file a claim.
Bundle Policies
When you bundle different kinds of insurance, like general liability and property insurance, into a business owner’s policy, the premiums are often less than if you bought the coverage separately.
Keep your workplace safe
By lowering the chance of accidents and injuries, making sure the workplace is safe can help lower insurance rates. This includes giving the right training, following safety rules, and keeping equipment and buildings in good shape.
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Conclusion
Small business insurance costs can vary a lot based on things like the size of the business, the industry it’s in, and the type of coverage it needs. But business owners can make sure they are adequately covered without paying too much for insurance by evaluating the risks, getting multiple quotes, raising deductibles, bundling policies, and making sure their workplace is safe. Investing in small business insurance is the best way to protect the business and keep risks to a minimum.
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