To get started, let’s get one thing straight: business insurance will widely differ. It will determine from the business itself to economical reasons. You may have even noticed the big difference between two similar companies. But, how much does insurance cost for a small business?
Many factors are involved in that process. that includes what type of policy you need, the coverage of said policies, and more. This article is to help entrepreneurs understand small business insurance and how to navigate it. Let’s get started!
The Average Cost of Small Business Insurance
As stated above, it all depends on the insurance companies and the business. We will take two examples: Progressive and Insureon and see how they compare with business insurance.
Business Owner’s Policy
- Progressive ($101) Insureon ($99)
Commercial Auto Insurance
- Progressive ($188) Insureon ($142)
General Liability Insurance
- Progressive ($65) Insureon ($65)
Professional Liability Insurance
- Progressive ($56) Insureon ($97)
Worker’s Compensation Insurance
- Progressive ($111) Insureon ($111)
As you can see, not every single policy is the same. Some companies will offer add-ons such as data breach insurance or professional liability insurance. Of course, not every business is identical as well. For instance, Insureon is an online business insurance marketplace. It allows the customer to learn about different insurers. This allows the customers to choose better and even cheaper coverage.
A smart move to make is to get multiple business insurance quotes for any and all coverage that you are interested in. Many can be quick to offer, while others have you go speak with a broker to get more information.
Factoring Affects of the Small Business Insurance
Business insurance rates for a small business will be determined by several important factors.
Location
Yes, surprisingly, insurance rates will be determined by the location of your business. State laws are in charge of coverage levels which is vital to workers’ compensation insurance.
Location is also a factor in commercial auto insurance costs because of urban or rural areas. Premiums for insurance is usually higher in cities as well as places that have higher claim rates.
Payroll
The workers’ compensation insurance relates to how big your payroll is going to be every year. As it varies with the states, worker’s comp can be anywhere from just 50 cents to up to two dollars every month for every $100 dollars. This data is based on the National Academy of Social Insurance which did a report last year on it. General liability can be found using revenue.
Size
The number of employees also directly relates to your business insurance. Why? Because more employees mean a higher chance of accidents and injuries.
A larger business is able to pay more than those with a few employees. Businesses with no employees are exempt from workers’ compensation.
Industry
Perhaps the most important part of insurance is what kind of business it is. Some industries like construction are riskier than office jobs. Because of this, the cost of professional liability insurance will be higher.
Workers’ compensation insurance will be even more specific. It requires knowing each and every task that employees do in order to have the appropriate coverage for the business.
Coverage and Deductibles
The business’ insurance will be determined by how much your policies will be paying out and what the conditions are. Going for a lower deductible will increase the cost of the business insurance policy.
Those with comprehensive coverages will cost more than the ones that have just the bare minimum for liability coverage as dictated by the state.
Claims
A small business with multiple business insurance claims can be a huge red flag for insurance companies. This tells them that you are risky or you are not handling the business well, leading to an increase in possible risks.
You want to do everything in your power to avoid getting claims.
Small Business Insurance and Lowering the Cost
If you want to save money for your small business, then you want to have little to no claims made against you. Insurance companies will reward businesses if they are good about safety. In order to get discounts and pay less for insurance, consider the following:
- Adjust Deductibles: Higher deductible means a lower premium.
- Bumble Coverage: Insurance providers usually offer discounts if you buy several at once.
- Invest in Safety: In order to avoid claims, invest in safety training and keep up to date on training and on maintenance.
- Prepay Annual Premium: If you pay annually, depending on the insurer, they will give you a discount.
Conclusion
This is a quick rundown of what you need about small business insurance and how much it costs. If you are just getting into the business industry, take some time to go over several insurance companies to find the right one for you
