Business Insurance Cost

How Much Does Business Insurance Really Cost?

(Don’t worry, it won’t bankrupt the board)

Christine Lacagnina | July 22, 2018
Small Business Insurance

Whether your grand opening is this weekend or it was way back in the last century, it’s important that your business is fully covered. But maybe you’re saying to yourself, “Isn’t insurance super-expensive?” Our answer: “It doesn’t have to be.”

Our independent insurance agents shop and compare policies from multiple carriers to find the perfect coverage for you. That means protection AND price. And since no two businesses are alike, they’ll make sure your unique needs are locked, loaded and ready for whatever may come.

We’re here to help simplify your search. But we can’t just say, “That’ll be $5 a month, will that be cash or check?” We can, however, give you a little background on business insurance rates and how they’re calculated to get you started.

How Business Insurance Costs Are Calculated

The insurance company’s number crunchers start by reviewing a list of various risk factors (things like size, location, etc.).

Each of these risk factors has a cost associated with it that is determined through studies of historical trends or analytical models (boy, it's getting really scientific in here). Then they begin checking off the factors that apply, add them all up, mix in a pinch of profit margin to taste and—voila—your rate is served.

NOTE: the cost of your coverage might change over time, as the financial demands of offering the plan may increase. Just a heads-up.

What Is Business Insurance and Why Do I Need It?

Business insurance is a contract between a business and an insurance company. This contract basically states that a business will pay their premium and the insurance company will help replace, repair or recover your business’s covered possessions if they are ever lost, stolen or damaged.

Think you don’t need it? Think again. Coverage is important to protect your business from all sorts of bad stuff that happens nearly every day, like:

  • Losses: In the event theft or damage
  • Legal things: In the event of harm caused to a third party by your products/services
  • Oopsies: In the event of a professional mistake that causes harm/destruction

What Kind of Business Insurance Coverage Do I Need?

Owning a business can be rewarding, but it can also be a real nail-biter if you’re a bit of a worry wart. To put your entrepreneurial anxieties to bed, you’ll want to discuss your specific business needs with your agent. Here’s a few of the basics you’ll cover, before getting into a more finely tuned policy:

  • Property Insurance: protects the building and its contents, whether it’s from an employee mistake or a hurricane
  • Liability Coverage: protects you if you’re sued. It doesn’t matter if you’re a beauty salon or a bubble wrap factory, one accident could cripple you with medical bills and legal fees.
  • Workers' Comp: ensures your business complies with the law. Employees must be covered in case of injury on the job, or illness suffered due to their work. 

What Factors Influence the Cost of My Plan?

When the insurance company is checking off their list to calculate your rate, they’re reviewing things like:

  • Your business's classification (i.e., sole proprietorship, corporation, etc.)
  • Your business's goods or services
  • Your business's employee numbers
  • Your business's salary totals
  • Your business's day-to-day life (what your employees do when they're not checking their email)
  • Your business's risks (i.e., heavy lifting, tornado chasing, etc.) 
  • Your business's stuff i(.e., buildings, vehicles, equipment and supplies) and their values
  • Your business's sales reports
  • Your business's location

How Much Does Business Insurance Cost?

Simply put, the cost of your insurance will depend on what your business does and how much of it you do. Depending on the type of operation you run, you may need to purchase several different types of additional coverage (i.e., if your business has delivery vehicles, you'll need to get commercial auto coverage). But for starters, here are a couple of fun examples:

  • A tiny shoe repair cobbler nestled on the corner of a quiet downtown street would need a combination of property and liability coverage, which might run at about $1,200/year. If they had additional employees and needed workers' compensation, that aspect of the coverage might add another grand on top of that.
  • A large gas company based in Louisiana that owns wells and trucks and has several locations as well as tons of employees might pay more than $10 million/year for coverage. 

Business Liability Insurance Costs

While there really are no average business liability insurance costs for both small and large businesses, we can consider some sample scenarios.

  1. A sole proprietor might pay $500 per year for general liability insurance, but a small consulting firm is likely to pay over $3,000 per year.
  2. A sole proprietor who hems garments out of a home office has limited liability concerns, but a landscaper may pay upwards of $15,000 annually due to increased risk.

Connect with an Independent Insurance Agent to Compare Rates

Comparing policy rates by yourself can be complicated and there's a lot to digest. Here's where our agent comes in to save the day. They'll know everything that's important to consider when comparing rates.

An independent insurance agent can make your business life a whole lot easier. Since they're not tied down to one insurance company, they're free to shop, compare, and assemble all the pieces of the coverage puzzle for you.

The Lowdown on Online Quotes

We know what you want—quick n’ easy business insurance quotes in under a minute. We get it, you want the lowdown, A-SAP. However, choosing supersonic speed could mean sacrificing accuracy...which could end up costing you.

Online companies might leave out options that'll save you some serious green, while conveniently leaving in factors that assume higher risk and calculate a pricier policy.

Plus, our competitors might also sell your precious info to multiple companies, which could lead to a bunch of unwanted voicemails from unknown numbers. We grabbed the mic and gave it to YOU by providing the info and options to connect with an independent insurance agent when YOU are ready.

TrustedChoice.com Article | Reviewed by Paul Martin

Now, who's ready to get their insurance problems solved?