How Much Does Business Insurance Cost? A Helpful Guide

You can protect your livelihood from liability claims by understanding a few facts about small business insurance.

Whether you’ve been in business for a decade or you’re a startup, your business needs insurance. You may think insurance is costly.

However, that’s not always the case. Read on for the answer to the question, “How much does business insurance cost?”

Does My Business Need Insurance?

An insurance provider will determine your company’s business insurance cost by evaluating several factors, such as the location and size of your business.

Insurers use historical information and analytical tools to correlate risks to the characteristics of your business. These kinds of factors have an associated cost that’s directly associated with risk.

They’ll begin the process of figuring out your small business insurance cost by evaluating all the risk factors tied to your business. They’ll then add up those risk factors and assess your company’s profit margin.

Now, they’ve completed the formula that determines the cost of your insurance. As your business changes, the cost of your insurance may change.

Business insurance is a contract between you and an insurer. The agreement states that you’ll pay your monthly premium.

It also states that the insurance company will help you repair, replace, or recover lost assets. It will protect your business if your property gets lost, stolen or damaged.

Most people don’t think they need insurance. That is until they do.

It’s vital that you protect your business from any number of things that may go wrong. It’s more important to ask, “What events could cause my business to shutter?” rather than “How much is business insurance?”

Some things are out of your control. For instance, someone could break into your storefront and steal equipment. Also, you could find yourself entangled in a lawsuit that originated because of the defect in a product made by another company.

Owning a business is rewarding. However, it’s also risky. Insurance protects you from those risks.

Different Types of Small Business Insurance

There are several different types of small business insurance. For instance, property insurance protects your building and anything inside of it.

Property insurance will protect you whether damage occurs because of a mistake, such as a fire, or a natural disaster such as a hurricane.

Liability insurance protects your company if someone sues you. A single accident could result in significant medical bills and legal fees.

Meanwhile, worker’s compensation covers your business in case one of your employees gets hurt. If you have employees, you must buy workers comp insurance to comply with the law.

Worker’s compensation will also protect your business if you find that you have to pay medical bills for employees. Without coverage, these kinds of expenses can hurt your finances and may even put you out of business.

The type of insurance that you purchase also depends on the structure of your business. For instance, a sole proprietor would need a different insurance policy compared to a corporation.

The type of services or products that you offer will also affect your choice of an insurance policy. Additionally, you need more or less coverage depending on the number of workers you employ.

Also, different businesses have different financial responsibilities. These varying responsibilities will also affect the cost and coverage of your insurance policy.

How Much Does Business Insurance Cost?

Ultimately, the cost of your insurance policy varies depending on what your business sells or provides. It also varies based on your volume of business.

Remember, insurance prevents you from paying losses out-of-pocket. Therefore, the salaries you pay will also affect the cost of your coverage.

Depending on your operation, you may need several different types of insurance. For instance, if you use delivery trucks, you’ll need commercial vehicle insurance.

Imagine that you own a small retail storefront in the small business district. More than likely, you’ll need a combination of property and liability insurance. This type of policy may cost over one thousand dollars annually.

Alternatively, a large utility company that owns wells and trucks may pay millions each year for coverage. At the same time, a consulting firm may pay several thousand dollars per year for an insurance policy.

Meanwhile, the average cost of business insurance for sole proprietors is typically a few hundred dollars a year for general liability insurance.

A landscaper – who conducts business on other peoples’ properties – may pay several thousand dollars per year for an insurance policy. They must protect themselves if they cause harm to someone else’s property.

Finding the Right Insurance Provider

Now, you understand that there is no clear-cut answer to the question, “How much does business insurance cost?” As you can see, many different factors can affect the cost of your insurance policy.

Before you approach an insurance provider, make sure you have a clear understanding of your type of business, your location and your employees.

These characteristics are an excellent starting point for assessing the type of insurance that you need for your business. The policy you choose will directly correlate to the size of your enterprise.

Many small businesses purchase a Business Owner’s Policy (BOP). This kind of policy is suitable for companies with fewer than 100 employees and revenues of less than $5 million a year.

Still, you can purchase customized insurance to cover your unique business. However, many insurers offer standardized policies for small companies that are affordable but protect your company from risks.

Stay Safe, Stay in Charge

Many successful businesses start in a garage or a spare room. These small startup firms typically only have one employee and little revenue.

Nevertheless, it’s still essential that even small businesses protect themselves against risks. A mistake during this early stage can end a business before it begins.

Whether you want to protect yourself from hackers, fire, or natural disasters, there’s a policy that’s right for your organization. Harrah & Associates can protect your business from any potential liability.

Connect with us today for a quote and take the first step towards achieving peace of mind. Our experts are standing by to answer the question, “How much does business insurance cost?” for you.