“How much is business insurance?” If you’re asking, you’re not alone. Business insurance is one of the most important investments a small business can make — yet many entrepreneurs don’t know what to expect in terms of cost.
Whether you’re a freelancer, retail shop owner, or construction contractor, understanding what determines your business insurance cost will help you make informed financial decisions. In this guide, we’ll break down average premiums, types of insurance you may need, and the factors that influence the price.
What Is Business Insurance?
Business insurance refers to a set of policies designed to protect your company from financial loss due to property damage, lawsuits, accidents, cyberattacks, and more.
Rather than being a single policy, business insurance usually consists of multiple policies, such as:
- General Liability Insurance
- Commercial Property Insurance
- Workers’ Compensation Insurance
- Professional Liability (Errors & Omissions)
- Cyber Liability Insurance
- Business Owner’s Policy (BOP)
Each serves a unique purpose and can be customized based on your business’s needs.
How Much Does Business Insurance Cost?
Here is a general breakdown of average annual costs for various types of small business insurance:
| Insurance Type | Estimated Annual Cost | What It Covers |
|---|---|---|
| General Liability Insurance | $400 – $1,500 | Bodily injury and property damage |
| Commercial Property Insurance | $500 – $3,000 | Buildings, equipment, and inventory |
| Business Owner’s Policy (BOP) | $500 – $2,000 | Liability + Property (bundle) |
| Professional Liability | $600 – $2,500 | Negligence, errors, missed deadlines |
| Workers’ Compensation | $450 – $2,500 per employee | Workplace injuries and medical expenses |
| Cyber Liability | $700 – $2,500 | Data breaches, cyberattacks |
| Commercial Auto | $750 – $2,500 per vehicle | Vehicles used for business purposes |
💡 Tip: Bundling general liability and property insurance into a Business Owner’s Policy (BOP) can save you money.
Factors That Affect the Cost of Business Insurance
Several variables affect how much you’ll pay for business insurance:
1. Industry Risk
Some industries face more risks than others. For example, construction or manufacturing businesses usually pay more than marketing or software consulting firms.
2. Location
If your business operates in an area with high crime rates, extreme weather conditions, or legal exposure, premiums will likely be higher.
3. Business Size
The number of employees, total revenue, and size of your operations all influence your insurance cost.
4. Claims History
Businesses with previous claims on record often face higher premiums.
5. Coverage Amount
The more coverage you need and the lower your deductible, the more you’ll pay annually.
6. Assets & Equipment
High-value assets like vehicles, heavy machinery, or tech equipment increase the cost of your coverage.
Real-Life Example
Let’s compare two business types:
- A freelance graphic designer working from home might pay $500–$1,000/year for general liability and cyber coverage.
- A restaurant owner with staff, property, and customer foot traffic may pay $5,000–$10,000/year for full coverage, including workers’ comp, liability, and property insurance.
How to Save on Business Insurance
- ✅ Compare quotes from different insurers
- ✅ Work with a broker to find tailored packages
- ✅ Bundle multiple coverages in a BOP
- ✅ Improve workplace safety and risk management
- ✅ Review policies annually and adjust coverage as needed
