Average Small Business Insurance Cost (2026 Report)

• Construction GL is priced differently than other industries: At $337/month, construction GL runs nearly four times the national average. The reason is that GL policies for contractors cover both active job sites and completed work claims that can be filed years after a project ends. When you get a construction GL quote, confirm whether completed operations coverage is included and what the aggregate limit is. Many low-cost quotes exclude it or cap it well below the occurrence limit.
• Transportation auto and workers' comp both run high: Transportation is the only industry where both auto ($349/vehicle) and workers' comp ($343/employee) sit at the top of their respective ranges at the same time. For a 3-person operation running 2 vehicles, those two lines alone average around $1,700/month before adding GL. Build your budget around those two lines first, then add the others.
• Childcare professional liability covers a specific risk: The $166/month professional liability figure for childcare is higher than any other industry because this policy type covers abuse and molestation liability in addition to standard E&O. Many states require it for licensed childcare operators. If a quote you receive excludes this coverage to lower the price, ask specifically what the professional liability portion does and does not cover before accepting it.
• Wholesale and manufacturing property costs reflect inventory value: Commercial property for wholesale ($480/month) and manufacturing ($471/month) runs more than 4.5 times the national average. Insurers price these policies based on the total value of inventory and equipment on-site, which for these industries can run into millions of dollars. If your insured property value is low relative to peers in your industry, you may be able to negotiate the rate down at renewal by providing a current inventory valuation.

• Higher GL limits: Residential clients rarely specify insurance requirements. Commercial clients typically require $1 million per occurrence at minimum, and property managers or general contractors often require $2 million. Construction and contracting, where commercial work is standard, averages $337 per month for GL compared to the national average of $123. That $214 monthly gap is largely the cost of carrying limits commercial clients require.
• Completed operations coverage: Residential work rarely triggers claims after a job is done. Commercial contracts expose you to completed operations claims that can come in years after a project closes. Carriers price that tail into your general liability coverage premiums when they know commercial work is part of your mix, and it does not go away at renewal once you have taken on that exposure.
• Workers' comp scales with commercial crew sizes: Commercial jobs typically run larger crews than residential ones. Workers' comp is priced per $100 of payroll, so adding people to meet commercial project demands raises that line directly. Construction averages $319/mo per employee for workers' comp against a national average of $113/mo, a gap of nearly over $200/mo per employee that reflects both the physical risk of the work and the payroll base that comes with commercial-scale staffing.
• Moving from sub to general contractor: As a subcontractor, your GL covers your scope, and you work under the general contractor's umbrella for the broader project. As the GC, your policy covers the full job including work done by subs you hire, and you are responsible for collecting certificates of insurance from every sub on the job. This is because uninsured subcontractors can become your liability otherwise, and making each person you hire for a job get covered lessens your personal expense and overall risk.

A commercial lease adds two costs that most home-based and mobile businesses have not budgeted for including commercial property coverage and a general liability limit increase to satisfy the lease. How significant those are depends on your type of work:

• Both workers' comp and commercial auto are coverages to compare closely when shopping by location. Workers' comp ranges from $63 per month in Indiana to $269 in New York, a gap of more than $2,400 per year per employee. Commercial auto runs from $79 in Pennsylvania to $312 in Michigan, a $2,799 annual difference per vehicle. If your business relies heavily on either of these lines, where you operate has a real effect on your total insurance cost.
• General liability falls in the middle of the state cost spectrum. The cheapest state averages $87 per month and the most expensive averages $190, a $1,243 annual gap that is meaningful for businesses buying higher limits. California, Washington D.C., and New York consistently sit at the top of the GL range, while West Virginia, Mississippi, and South Dakota sit at the bottom.
• Commercial property and cyber insurance move much less by state. Property ranges $40 per month from cheapest to most expensive, and cyber ranges $32. For these two lines, your industry and the value of your assets or data matter far more than which state you are in. Professional liability barely moves at all, and the spread across all 51 states is $15 per month. When shopping professional liability, spend your comparison time on policy terms, coverage triggers, and exclusions rather than trying to find a meaningfully better rate in a different state.

• If you have employees, vehicles, or a physical location in a second state, you generally need insurance coverage that extends to that state. Most carriers can write multi-state policies, but the premium for each state reflects that state's rates rather than your home state's rates. A business based in Iowa expanding operations into New York will pay New York rates on the coverage lines that apply to their New York exposure.
• Workers' comp is the line where location matters most in practice. New York charges roughly $269 per month per employee, compared to $76 in Texas or $77 in Alabama. If you are hiring even one employee in a high-cost state, factor that rate into your budget before you commit. For businesses that have flexibility in where they hire remote employees, workers' comp costs are a concrete reason some choose to hire in lower-cost states when the role does not require a specific location.
• For commercial auto, the state where a vehicle is garaged determines the rate, not where your business is incorporated. A delivery vehicle based in Michigan costs more to insure than the same vehicle based in Pennsylvania, regardless of where the company's headquarters is located. If your expansion involves adding vehicles in a new state, get a quote specific to that state before assuming your existing auto rate will apply.

• Your first hire is the most significant insurance event: A sole proprietor averaging $170 per month in core coverage moves to $375 when adding a first employee, an increase of about $2,500 per year. Workers' comp adds roughly $1,350 per year as a new line, and GL re-rates to reflect expanded payroll exposure. Budget for both before you hire to avoid financial surprises.
• Workers' comp costs vary widely by state: Per-employee rates range from $63 per month in Indiana to $269 in New York. If you are hiring in a high-cost state, the national averages in the table will understate your actual cost. Four states also require coverage through a state fund, which removes the ability to shop the rate.
• Classifying workers as contractors instead of employees does not eliminate workers' comp exposure: If a 1099 worker is later reclassified as W2, you may owe back premiums and coverage for claims during that period. Moving from 1 to 4 to 5 to 9 employees through reclassification adds workers' comp at $102 per month and pushes GL from $123 to $330, a combined annual increase of around $3,700.
• General liability is audited annually against your actual payroll and revenue: If your business grew faster than projected at binding, you may owe additional premium at audit. Businesses crossing from 1 to 4 into 5 to 9 mid-year can see general liability rates increase by more than $2,400 per year at renewal when the carrier re-rates to the higher band.
• Cyber underwriters assess how many people have access to your systems: Coverage rises from $83 per month at 1 to 4 employees to $283 at 20 to 49. At higher bands, carriers also begin requiring documented security controls like multi-factor authentication and endpoint protection as a condition of coverage.
• Client contracts may set coverage minimums tied to your headcount: A business at 1 to 4 employees may satisfy a contract with $1 million in general liability coverage. The same client may require $2 million once you cross 10 employees, particularly for government and enterprise work. Review contract requirements when you cross that threshhold.