Insurance is a necessity for most small businesses, but the cost of small business insurance coverage varies widely from one company to the next depending on the size and nature of your business.

Get the coverage you need today.
ll For A Free Quote @  855-718-1061


Average Cost for Small Business Insurance

The extent of your small business insurance coverage will depend on your company’s specific needs. For example, a sole proprietor may not need coverage for workers’ compensation, while a business owner with a storefront and multiple employees will.

The average cost of small business insurance is about $400 to $800 per year or $34 to $67 per month — but as you can assume, purchasing more coverage will make you incur additional costs.

For example, you might invest in a business owner’s policy that costs $100 per month and add general liability coverage that runs you another $50 or $60 per month.

How Much Does Small Business Insurance Cost?

In 2021, the median monthly cost of a business insurance policy for new Progressive customers ranged from $42 for professional liability to $68 for a business owners policy (BOP).

PolicyMedian CostAverage Cost
General Liability$48/month$65/month
Business Owners Policy (BOP)$68/month$101/month
Workers’ Compensation$65/month$111/month
Professional Liability$42/month$56/month

Get the coverage you need today.
ll For A Free Quote @  855-718-1061

Small Business Insurance Cost Factors


Number of employees

There are fewer liabilities involved when you’re working on your own than when you start to employ other people. There is more room for error when you have other people involved in your operation. That’s why the policy rates of some types of insurance, like workers’ comp insurance and general liability, are based on payroll. The higher your payroll, the higher your insurance costs.


Small operations often pay less for insurance coverage compared to larger companies. That’s because they tend to face less risk. In general, the higher your revenue, the greater your risk exposure. Some insurance policies (like liability insurance) are partly based on your sales.

It makes sense because the more you make, the more exposure you have (and the more you have to lose). And the more exposure you have, the more coverage you need. The cost of your policy rises with the level of risk exposure.


Your industry

Low-risk industries can often get more affordable business insurance. Florists, insurance agencies, retail stores, and designers can be considered lower risk for some coverages. But if you need consultant insurance, mechanic insurancecontractors insurance, or handyman insurance, you will probably pay more because you face more risk.

Your location

The price of business property insurance and liability insurance varies by state and zip code. For example, rural areas can have higher property rates compared to urban areas. One reason is that fire departments or fire hydrants are less accessible.

However, a shop in an urban area might pay more for liability insurance. That’s because there is more foot traffic in their location compared with a country general store. (More foot traffic=more risk.) Location also determines your cost of small business insurance.


Your business property

Some insurance policies will consider the size of your building, office space, and business assets. This makes sense because the more property you need to protect, the more your insurance will cost. Property, liability and business owner’s policies are a few.

Your policy limits

Policy limits mean the max amount an insurance company will pay for a claim. If you pick a limit of $500,000, the price will be lower than a policy with limits of $1 million. The limits essentially spell out how much coverage you you need from the insurance company. The more you need, the more your policy will cost.

Your deductible

A deductible is the amount of money you pay for a claim before an insurance company gives the payout. If you choose a lower deductible, the price of your policy will go up. Alternatively, if you choose a higher deductible, your business insurance cost will be lower. That’s because you’re sharing more of the risk with your insurance provider.

The types of coverage you need

Each type of insurance policy covers a specific set of risks and therefore has its own range of rates. In general, the higher the liability limit, the higher the cost of the insurance policy. For example, general liability insurance typically costs less than professional liability insurance because many general liability accidents are relatively simple claims. Let’s say you’re a dentist and a client comes to your office for a checkup. Your GL policy pays the claim when a patient trips on the stairs and fractures their wrist. But if you crack a patient’s tooth, your PL policy would cover the malpractice lawsuit. And it would more costly in most cases. That’s why why general liability tends to cost less than professional liability insurance.

Small Business Insurance Cost by Policy

While your company may have its own specific risks that require additional coverage, the following are the costs of common policies that cover most scenarios that small business owners may face. A wider variety of policies you particularly may need can be found listed further on.

General Liability Insurance

Typical cost for general liability insurance is $46 per month, but it can be as low as $21 and as high as $166 ($250 to $2,000 per year). The price varies depending on your industry, years of operation, number of customers, revenue, and claims history.

General liability insurance protects your business in case either you or your employees cause third-party damage, bodily injury, or related situations. These policies cover costs related to lawsuits and claims, including investigations, settlements, legal fees, and damages.

Commercial Property Insurance

Typical commercial property insurance costs $85 per month, but the rates can range from $42 to $417 ($500 to $5,000 per year). The premiums vary based on your location and assets.

Commercial property insurance protects your company’s property, assets, and equipment from damage, theft, and breakdown, and will replace lost revenue.

Business Owner Policy (BOP)

The typical price for a business owner policy (BOP) is $100 per month. Depending on your assets, location, and risks, the rates can range from $42 to $292 per month ($500 to $3,500 per year).

A BOP is a policy package that combines key insurance coverages that most small businesses require. The typical business owner policy includes general liability and commercial property insurance.

Professional Liability Insurance

Most professional liability insurance policies cost $60 per month. The rates range from $40 to $84 per month ($500 to $1,000 annually) depending on your industry, location, employees, coverage, and limits.

Professional liability insurance protects your business if a customer or client claims your service caused damages that lead to losses and decides to take legal action.

Errors and Omissions Insurance (E&O)

Common errors and omissions policies cost $145 per month. Depending on your profession, location, clients/customers, and number of employees, the premiums can range from $75 to $167 per month ($900 to $2,000 annually).

E&O insurance covers your business from claims of negligence, mistakes, and oversights during the course of your work.

Workers’ Compensation Insurance

Most workers’ compensation insurance policies are paid for each employee and cost $38 per month. Depending on your location, industry, and employee salary the rate per employee can range from as low as $5 all the way up to $240 per month ($35 to $2,876 per year).

Workers’ compensation insurance covers medical costs and lost wages resulting from on-the-job injury or illness. It provides protection for employees so they are not responsible for their own medical costs. Additionally, it prevents employers from getting sued for related expenses.

Cyber Liability Insurance

A typical cyber liability insurance policy costs $92 per month. The premiums range from $63 to $667 a month ($750 to $8,000 annually) depending on factors including risks, industry, revenue, and location.

Cyber liability insurance policies protect businesses from liabilities, damages, and losses related to data breaches and other cyber attacks.

Small Business Insurance Costs by State

Businesses in highly populated areas or places prone to natural disasters will likely pay more for policies compared to more rural locations with fewer occurrences of flooding, hurricanes, or wildfires. Here are some average costs for general liability business insurance based on location.

    • California: $55 per month
    • Colorado: $53 per month
    • Florida: $58 per month
    • Georgia: $69 per month
    • Illinois: $46 per month
    • New York: $65 per month
    • Oregon: $48 per month
    • Pennsylvania: $60 per month
    • Texas: $59 per month
    • Virginia: $35 per month

Small Business Insurance Costs by Industry

High-risk businesses will have higher insurance costs. For example, a brick-and-mortar store or small construction company will have more risks than a sole proprietor who works as a freelance copywriter. Here are some average monthly premiums for a business owner policy in various industries.

    • Cosmetics and Salons: $550 per month
    • Pharmacy: $700 per month
    • Retail: $800 per month
    • Real Estate: $600 per month
    • Construction and Landscaping: $900 per month
    • Marketing: $300 per month
    • Freelance Writer: $130 per month
    • Restaurant: $1,000 per month

Small Business Insurance Cost by Profession

The most significant factor that influences your small business insurance cost is your profession. The following are some examples of policies for different industries, including what they cover and their prices.

Restaurant Insurance

Most restaurant insurance policies cost around $300 per month. Depending on your revenue and location, premium prices range from $88 to $840 per month ($1,050 to $10,000 per year).

Restaurant insurance policies cover claims related to foodborne illness, customer harm, third-party property damage, personal property damage, and business interruption.

Plumbing Insurance

Typical policies cost $89 per month. Depending on your service, coverage, and claims history, rates can be as low as $39 and as high as $89 per month ($468 to $1,068 annually).

Plumbing insurance covers lawsuits and other liabilities from injuries and damage to a client, third-party, or their property while conducting installations, repairs, or any other service.

Retail Insurance

A typical retail insurance policy costs $49 per month. Depending on your business, location, and coverage, premium rates can range from $39 to $49 per month ($468 to $588 per year).

Retail insurance policies protect your business from liabilities related to harm to customers and third parties and damage to your own store.

IT Consultant Insurance

Common IT consultant policies cost $89 per month. Costs vary based on your provider, specialty, and customers, but premiums range from $39 to $289 per month ($468 to $3,468 annually).

IT consultant insurance protects your business against third-party injury and property damage, and any mistakes you make that could harm a client and result in losses.

Getting the cheapest business insurance

Finding the cheapest business insurance policy is a priority for the cost-conscious business owner, but always weigh the price against the coverage. You don’t want to pay for coverages you don’t need, but you also don’t want to be underinsured if something happens. Seek balance.

To help maximize your savings, analyze your business first to understand your specific needs. Be sure to include any contractual requirements and rule out any inapplicable coverages. Be informed.

You can save money by adjusting your deductibles. A deductible is the amount you pay out of pocket toward a covered loss at the time of a claim. Generally, the higher your deductible, the lower the cost of your annual premium. Just be sure you’re comfortable paying the deductible you select.

How to lower the cost of your business insurance

The best way to save money on your business insurance is to have very few claims made against your policy.

Insurance companies reward businesses that are diligent about worker and customer safety but will ding those with a history of accidents, workplace injuries or negligence lawsuits.

You can often earn discounts on your business insurance if you take the following steps:

  • Bundle your coverage. Most insurance providers offer discounts if you combine multiple types of business insurance into one policy, such as a business owner’s policy.

  • Prepay your annual premium. Your insurer may offer a discount if you pay annually rather than monthly.

  • Adjust your deductibles. Typically a higher deductible equals a lower premium.

  • Invest in workplace safety. Minimize your risk profile by offering formal safety training and keeping up with routine facility maintenance.

Regulating Agency and References

Insurance Information Institute (III)

This organization’s mission is to improve public understanding of insurance – what it is and how it works.
Visit us at