How Much Does Small Business Insurance Cost?

Small business insurance costs can fluctuate widely and are influenced by factors like business size, industry, location and coverage type. For example, a general liability insurance policy for an LLC with 20 employees might run around $67 per month. In contrast, a sole proprietor might secure the same coverage for $28 monthly. Rates are also different depending on the types of insurance you purchase; for instance, an LLC with 20 employees could pay $67 monthly for general liability insurance coverage, while workers' compensation and professional liability insurance would cost the same business $168 and $706, respectively. Understanding how these costs vary can help business owners find the most appropriate and cost-effective insurance coverage available.

Small business insurance costs vary depending on the specific type of coverage being purchased. Common types of business insurance that most business owners need include general liability, workers' compensation and professional liability insurance. Each caters to distinct areas of business risk and carries different costs. Depending on the nature of your operation, you might need only one type of these coverages or all three.

View the average cost of each insurance type in the table below to get a clearer picture of potential insurance expenses. Workers’ compensation insurance is typically only required for employers, which is why the table doesn't include workers’ comp cost data for a business without employees.

Employee count is a significant factor in general liability insurance costs, reflecting the increased potential risk associated with a larger workforce. For example, a sole proprietor without employees typically pays $28 per month for a general liability insurance policy with a $2 million aggregate limit, a $1 million per occurrence limit and no deductible. In contrast, an LLC with 20 employees will pay around $67 monthly for the same coverage.

General liability insurance is an essential safeguard against common business risks such as bodily injuries, property damage and advertising injuries. This coverage offers critical financial protection for small business owners, helping manage potential legal costs and payouts resulting from unforeseen incidents.

While workers' compensation insurance requirements differ from state to state, this coverage is required for most businesses with employees. For an LLC with 20 employees, workers' compensation insurance costs around $168 per month. This cost represents a policy with a $1 million total policy limit, a $1 million per accident limit, and a $1 million per employee limit.

Workers’ compensation insurance provides coverage for job-related injuries or illnesses, offering benefits for medical expenses, lost wages and rehabilitation costs. It can also provide a death benefit to the dependents of an employee who dies from a work-related incident. Workers' comp not only protects the health and well-being of employees but also safeguards businesses from potential lawsuits related to workplace injuries. This coverage can be a key part of risk management for any company with employees, ensuring a safer and more secure working environment.

For a sole proprietor with no employees, professional liability insurance costs $80 per month, on average. In contrast, an LLC with 20 employees will likely pay $706 per month. These costs reflect a policy with a $1 million per occurrence limit, a $1 million aggregate limit and a $5,000 deductible.

Professional liability insurance, also known as errors and omissions (E&O) insurance, is often necessary for businesses that provide professional services or advice. It covers legal fees and damages in the event that a business is sued for negligence, errors or omissions in the course of their professional services. This insurance can help preserve the reputation and financial stability of a business.

The cost of small business insurance is influenced by several factors, including your company's industry, size and location.

Being aware of these factors can help you more effectively understand your small business insurance costs. Working closely with an insurance provider could also help you gain a better understanding of how these factors influence your premiums and identify opportunities to mitigate risks and control costs.

As a small business owner, there are several steps you can take to manage your insurance costs effectively:

By taking these steps, you can have more control over your small business insurance costs, ensuring you have the coverage you need at a price that fits your budget.

Understanding the cost of business insurance can help you manage your business's financial health and protect against potential risks. The questions below aim to clarify important aspects of business insurance costs, providing you with the information needed to make informed decisions about your coverage needs.