How much does business insurance cost?
In 2024, the median monthly cost of a business insurance policy for new Progressive Commercial customers ranged from $42 for professional liability to $80 for workers' compensation.
| Business Insurance Policy |
Median Cost |
Average Cost |
|---|---|---|
| General Liability | $60/month | $85/month |
| Business Owners Policy (BOP) | $67/month | $118/month |
| Workers' Compensation | $80/month | $125/month |
| Professional Liability | $42/month | $66/month |
Notice how the average business insurance cost depends on the type of coverage you need. Each policy protects against specific situations, and these differences are reflected in the price.
A company might need multiple policies to cover the full range of risks they face in their industry. Typical small business insurance costs will vary by coverage and profession.
How is the cost of small business insurance calculated?
Insurers calculate how much your business insurance costs using several basic factors, including your profession, number of employees, and coverage needs. You can expect to pay above the average rate if you require more coverage, lease a unique property, or have a claims history.
Learning how these factors influence your premium can help you secure the right combination of price and protection for your situation. Talk to a Progressive Commercial agent or start a quote online.
Average business insurance costs by industry
Professional services are exposed to different types of risk that can affect their small business insurance rate.
Tree trimmers and contractors are examples of riskier businesses. Their work is physical and often includes using power tools on other peoples' properties. These factors increase exposure, which might result in a higher premium.
In contrast, a home-based financial advisor doesn't share these risks, so they won't be factored into their rate. As a result, they'll likely pay less for coverage.
Average cost of small business insurance
Factors that affect your business insurance costs
Many factors affect how insurers calculate your small business insurance costs. They'll evaluate your overall risk by looking at your profession, number of employees, insurance limits, and more. Because these features can vary significantly between businesses, insurance rates can, too.
Profession
Your profession can affect your average rate. A business with higher risks can expect to pay more than a low-risk company. Different professions might also require different coverage combinations.
For example, most businesses need general liability, but a company that provides IT consultation might also need cyber insurance.
Number of employees
If you have employees, most states will require you to carry workers' compensation. This coverage can add to the total cost of insuring your business. Learn about workers' compensation insurance requirements by state to see what kind of protection you need to have.
Businesses with many employees can expect to pay more for insurance because their potential for claims is higher. Each additional employee increases exposure to accidents and other mishaps that can result in a claim. Take a closer look at how workers' comp insurance cost is determined.
Insurance limits
The amount of coverage you select has an impact on your premium. For example, a $1 million/$2 million policy will generally cost more than a $1 million/$1 million policy.
These limits usually can be adjusted to meet your specific needs and affect your final rate.
What is an aggregate limit?
An aggregate limit is the most an insurance company will pay toward a claim during a policy term. If your policy limits are $1 million/$1 million aggregate, you're covered up to $1 million for a single incident but no more than $1 million for the policy term. The length of your policy term depends on your carrier, but annual terms are the most common.
For example, three clients sue a carpenter in a year for $500,000 each, totaling $1.5 million. Individually, each incident is under $1 million, which meets the policy limits. However, the annual aggregate amount is exceeded, meaning the third incident won't be covered.
Property
Small businesses that rent or own commercial property can get coverage with a business owners policy (BOP). In this case, your insurance company will factor in the property value when determining your premium. See how BOP insurance cost is determined for small businesses.
Equipment
If equipment is necessary to your operations, insurers will typically ask about it in your business insurance quote. These items can include tools, lawnmowers, ladders, and more. Expensive equipment can increase your small business insurance rate. Read more about tools and equipment insurance.
Location
Where you live can affect your business insurance cost. Some areas, like large cities, have a high cost of living, which can translate to an increased rate. Property value, materials, repairs, and environmental risks are location-related factors your insurance company will consider. Review business insurance requirements in your state.
Time in business
Your business tenure can impact how much you pay for insurance. For example, a startup might have a higher premium than a company that's been in business for years. This difference is because newer ventures don't have an established insurance history.
Prior claims
Insurers typically see businesses with a claims history as higher risk, which means they could pay more for insurance. If you've had past claims but have adjusted your business practices to better manage risks and establish a good safety record, you could potentially get better rates.
Cost factors for types of small business insurance
Different types of coverage have different costs but share factors in determining them. Factors like the number of employees, type of work, and location are used to calculate your premium. For example, a workers' comp policy will cost more for a company with 100 employees working in a factory than it would for a consultant who employs 10 people in an office setting.
General liability insurance
The cost of general liability insurance depends on a variety of factors but industry can be a key driver. Some industries are perceived as being more prone to third party injury and property damage while others may not have these associated risks.
Business owners policy (BOP)
The value of your commercial property and security features can affect business owners policy costs. More expensive property will cost more to insure and enhanced security measures can help mitigate costs.
Workers' compensation insurance
The type of labor employees engage in can impact workers' comp costs. So will the number of employees on your payroll and your claims history. Workers' comp is regulated by the states, so your location will also make a difference in your rate.
Professional liability insurance
When it comes to the cost of professional liability insurance, the potential impact of errors and omissions has a significant impact. Claims history and number of employees can also impact costs.
Getting the most affordable business insurance
Small business owners typically want the cheapest business insurance policy, but they need to weigh price against protection. While you don't want to pay for unnecessary coverages, you also don't want to be underinsured if something happens.
While all these factors affect these insurance types to some degree, there may be strategies to save on your premium, including selecting the right coverages, adjusting deductibles, managing risks, and finding discounts. Start a quote online or work with a Progressive Commercial agent to see how much you can save.
Get your personalized business insurance rate today
The best way to find out how much you'll pay for business insurance is to get a quote. Take the guesswork out of finding the right cost and coverage by speaking with one of our experts. We'll walk you through the process and customize your small business insurance policy. Call us today, or start a quote online.
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