How much does small business insurance cost?
As a business owner, you want to be sure you’re spending your money wisely. The first rule of thumb is to find out how much something costs before you commit to buying it. So, you’re wise to wonder, ‘How much does business insurance cost?’
The answer to that question depends on a few factors. Let’s take a look at some of the factors that go in to how much business insurance costs and some examples of what a hypothetical small business might pay for insurance.
What determines how much business insurance costs?
There are several factors that go into setting the price for business insurance. Here are the top 6.
How much can I expect to pay for business insurance?
Since there are a lot of variables, the best way to find out how much insurance will cost for your business is to get a quote. But for general information, here are some examples:
A business consultant in Texas has an annual payroll of $200,000. They want a general liability policy with a limit of $1,000,000 for each occurrence (claim) and an aggregate (total) limit of $2,000,000 for the policy period (usually one year), and no deductible. This business can expect to pay $350 a year, or $29.17 per month for their general liability insurance policy.
An IT consultant in California with annual revenue of $150,000 wants a professional liability policy with a $500,000 limit and a $5,000 deductible. They can expect to pay $441 a year, or $36.75 per month for their professional liability insurance policy.
How to keep business insurance costs down
There are two ways you can reduce the amount of money you will pay for an insurance policy. You can choose a lower limit, meaning the maximum amount insurance will pay for a single claim or for the policy term less. For example, a policy with a $2,000,000 limit will cost more than one with a $500,000 limit.
The other way to reduce your premium is to choose a higher deductible. If your deductible is $10,000, meaning you pay the first $10,000 of each claim, you will pay less than if your deductible is $500.
Consider the size of the largest claim you can imagine someone making against your business, and use that to determine what your limit should be. Then think about how much you can pay out of pocket before insurance covers the rest. This will help you decide on a deductible. A licensed Hiscox agent can help you answer these questions. (Call 866-283-7545, Mon – Fri, 7am – 10pm ET to talk with one.)
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