Gist: How Much Does Small Business Insurance Cost in America?

Small Business Insurance Cost – business in America has various costs related to accidents, injuries, potential equipment damage, and theft and liability claims. It needs good business liability insurance as a result, but some policies are pricey and don’t offer much coverage. That’s why it is important to understand the true cost and benefits of American business insurance.

Small Business Insurance Cost:

Many different insurance companies, ranging from Farmers to State Fund offer good liability insurance policies, but their benefits differ as do their price range. Most small, medium and large business owners turn to insurance agents to explain to them the benefits and prices of various policies, and to sell them insurance.

Any company in America needs general liability insurance, workers compensation insurance, commercial auto insurance, property insurance, directors and officers coverage, data breach coverage, and business umbrella coverage. Business owners can sometimes purchase these policies as a package, called a bundled policy, which can save them hundreds if not thousands of dollars.

Since every business is different, its business insurance needs will also be different, and thus the insurance cost. A manufacturing company would need a strong workers compensation policy and a strong equipment coverage policy. A car rental company would need a strong commercial auto insurance policy, a data breach coverage policy, a business insurance coverage policy, a workers compensation policy, and a directors and officers coverage policy. Sole proprietors do not need workers compensation insurance, and businesses solely offering information do not need equipment damage insurance.

Businesses may need additional insurance policies such as inland marine insurance, errors and omissions insurance, etc. A business’s total insurance costs will depend on the type and amount of insurance coverage it needs.

Business insurance tends to be expensive, and the amount a business pays depends on its size, the industry it is in, and the type of work it does, among other factors. For example, a sole proprietor may pay $600 a year for general liability insurance, but a medium-sized manufacturing firm may pay $5,000 a year for workers compensation insurance, and $4,000 a year for equipment damage insurance.

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The insurance cost of business also depends on its risk factors. For example, businesses engaging in risky activities, such as landscaping, home manufacturing, or general heavy manufacturing will pay more in insurance than an IT firm will; because the risk factor is much higher.

Business insurance costs depend on the company offering the insurance and its policy coverage. For example, State Farm may charge $1,000 for a commercial auto insurance policy, while the State Fund may charge $10,000 for a workers compensation policy. Rates for business liability insurance range between $1,000 to $3,000 a year per million dollars of coverage for small businesses.

The best way for a business to determine its overall business insurance cost is to obtain a quote from an insurance agent. Business owners should always look for seasoned insurance agents because business insurance is very complex and all policies are NOT equal. It is best for business owners to obtain insurance from a company representing a range of insurers because it prevents the cumbersome task of approaching each insurance company independently for quotes. Insurance agents who represent these types of companies can offer business owners the best deal. For example, a manufacturing company with no workers compensation claims for the past 5 years may be eligible for a 10% discount on workers compensation insurance.

As can be seen, the right business insurance policy combination is vital for a company because it can mean the difference between its financial success and failure.


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