Small Business Insurance Calculator

For most coverage types, adding employees increases your premium at a roughly proportional rate. General liability is different. In my data, sole proprietors pay $65/month on average for GL. A 1-to-4-person business pays $123/month. A 5-to-9-person business pays $330/month. A 10-to-19-person business pays $872/month. A 20-to-49-person business pays $2,298/month.

That is not a linear increase. The jump from a 1-to-4-person business to a 5-to-9-person business is 2.7 times the premium. The jump from 5 to 9 people to 10 to 19 people is another 2.6 times. The reason is that GL exposure scales with business activity, not just headcount. More employees mean more job sites, more client interactions, more vehicles, more revenue, and more surface area for a third-party claim. Underwriters price that multiplying exposure, not just the raw employee count.

State-level pricing variation in my data ranged from $50 to $312/month across all six coverage types for a 1-to-4-person business. Compared to the $27 to $337 industry spread for GL alone, state is a secondary or tertiary factor for most coverage types. The cheapest states in my study, North Dakota, Iowa, Idaho, Nebraska, and Wyoming, appeared consistently at the bottom across most coverage types. The most expensive, New Jersey, California, Washington D.C., and New York, appeared consistently at the top.

Workers' comp is where state becomes the dominant factor. Workers' comp is entirely state-governed. The rates, class codes, and coverage requirements are all set at the state level, which is why the same employee profile produces very different premiums depending on where you operate. New York averages $269/month per employee. Indiana averages $63/month. That is a 4x gap for an identical employee profile, driven entirely by state rate-setting and class code structures. For every other coverage type, state is a modifier on top of your industry rate. For workers' comp, it is a primary input.

My calculator uses industry, employee count, and employee count as inputs. The reason is that those three variables are the ones a business owner knows with certainty before talking to a carrier and they are the most influential. But underwriters also factor in revenue and payroll, which is not feasible to estimate well due to the extreme variation in regard to the other factors in my study.

What I did instead was calibrate my estimates to census-based average revenues and payrolls for each combination of state, industry, and employee count in my study. For the majority of small businesses those averages are close enough that the estimate lands within the accuracy range I cite. Where they break down is businesses with revenue significantly above or below that census average for their profile. If your revenue is an outlier for your industry and size, use the estimate for comparison and let the formal quote process give you the number that reflects your actual profile.

When I say estimates from this calculator are typically within 15 to 25% of a carrier quote, the main exception is businesses with prior claims. A single large GL or workers' comp claim within the past three years can increase your renewal premium significantly above what my model would estimate for your profile, and some carriers will decline to renew entirely after certain claims patterns. My model uses census-based business profiles with no claims history assumed. If your business has had claims, treat the estimate as a floor rather than a midpoint and expect your actual quotes to run above it.