Business Insurance Cost

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How much does small business insurance really cost?

The most frequent question our insurance agents get from small business owners is, "How much is business insurance" In an attempt to provide some guidance to those seeking this answer, we put together some policyholder data to shed some light on the topic.

The real answer to the question for any specific business will require getting the proper details about a businesses risk, but this survey can suffice as a quick reference for the startup or small business owner on a budget.

To get the findings in this survey, we analyze premium data from a random sample of small business insurance policies written by IronPoint Insurance Services in 2014. On other pages in this section, you'll see a breakdown of small business insurance costs by policy.

About This Analysis

The small business insurance cost data used in the following charts was compiled from a sample of 2,500 business insurance customers served by IronPoint Insurance Services in 2014. The sample was limited to businesses with between one and 10 employees. The mean (average) business had…

  • 1.88 people (median: 1)
  • $169,482.38 (median: $70,000) in revenue

The charts below offers a more detailed breakdown of the makeup of the businesses included in this analysis.

Number of Employees
Revenues

The cost information you'll find on this and related pages shows which policies these business owners bought, how much those policies cost, which factors affected the cost of coverage, and how much costs varied.

How Much Does Small Business Insurance Cost?

Regardless of industry, business size, or the number or type of policies bought, the average cost of a small business insurance policy in 2014 was $725.33. The median cost was $500.

Of course, those numbers only offer a very broad overview. Lots of factors affect the price of small business insurance, including…

  • Type of policy a business purchases.
  • Size of the business.
  • Industry.
  • Location.
  • Revenue.
  • Number of employees.

In some cases, the cost of coverage can even depend on the number of policies a business owner buys. That's because of the magic of bundling: as with discounts available when you bundle cable and Internet together, many insurance providers offer price breaks when small business owners buy multiple policies at the same time. (Learn more about the most popular way to bundle insurance for small businesses on our page about the Business Owner's Policy, or BOP, which bundles General Liability and Property Insurance.)

Number of Policies Dictates Cost

As with anything, the more insurance policies you buy, the more you can expect to pay. But how much more? Read on to get an idea of how your costs will be affected by buying multiple policies.

Number of Policies

Cost of 1 Insurance Policy

The majority of IronPoint Insurance Services customers (75 percent) buy just one policy. Of those who do…

  • 51.78% buy General Liability Insurance.
  • 16.48% buy a Business Owner's Policy (BOP).
  • 15.33% buy Errors & Omissions.
  • 10.97% buy Workers' Compensation.

The average cost for small businesses that buy just one business insurance policy is $692.98 per year, and the median is $500.

Cost of 2 Insurance Policies

For businesses that buy two policies, the average annual cost is $1,405.86 (the median is $1,125). The most popular two-policy combinations are…

  • 30%: General Liability + Workers' Comp
  • 28%: General Liability + Errors & Omissions
  • 14%: Business Owner's Policy (BOP) + Workers' Comp
  • 13%: Business Owner's Policy (BOP) + Errors & Omissions

Cost of 3 Insurance Policies

For businesses that buy three policies, the average yearly cost is $2,424.53 (the median cost is $1,930). The most popular three-policy combinations are…

  • 50%: General Liability + Errors & Omissions + Workers' Compensation
  • 30%: BOP + Errors & Omissions + Workers' Compensation

Cost of 4 Insurance Policies

The average yearly cost of insurance for businesses that buy four policies is $3,817.68. The most popular four-policy combinations are…

  • 63%: General Liability + Errors & Omissions + Workers' Compensation + Fidelity Bond
  • 26%: BOP + Errors & Omissions + Workers' Compensation + Fidelity Bond

How Policy Type Effects Cost

As mentioned above, the kind of insurance you buy affects how much you pay. No surprise there: umbrellas, tents, and roofs all come with vastly different price tags. They also offer significantly different types of protection. Business insurance works the same way. Each policy provides coverage for different types of risks, and its price reflects those differences.

For example: General Liability Insurance is one of the least expensive kinds of coverage we sell, with a median annual cost of just $425. Employment Practices Liability Insurance (EPLI), on the other hand, is one of the most expensive policies we offer, with a median annual cost of $1,585.

Why the difference? Because GL covers businesses for incidents like slip-and-fall injuries, which tend to be fairly straightforward and so have relatively low price tags. EPLI, on the other hand, covers businesses for employee-related issues of discrimination. These cases are often complex and require far more work from lawyers, which makes them much more expensive to resolve.

Take a look at the following chart to see where other small business policies fall on the price spectrum.

Policy Type

Dig Deeper into Insurance Costs

As we mentioned above, insurance costs vary greatly based on the type of insurance a business buys. Learn more about how much each of these insurance policies costs for small businesses.

  • General Liability Insurance Cost Analysis. General Liability is hands-down the most popular policy we sell. It's the first policy most businesses buy. If you're not sure what kind of insurance you need, start here.
  • Professional Liability Insurance Cost Analysis. Essential for any business that offers advice or sells services rather than goods, Professional Liability Insurance (also called Errors & Omissions) is at the center of many small business risk management plans.
  • Umbrella Insurance Cost Analysis. A handy and budget-friendly policy, Umbrella Insurance supplements the coverage offered by certain existing liability insurance policies. In some cases, businesses can substantially increase the insurance protection available to them for a relatively low price.
  • Workers' Compensation Insurance Cost Analysis. Most small businesses in America have only one employee (the owner), which means they probably don't need Workers' Comp Insurance. Businesses that do have employees, though, are almost always required by state law to carry this coverage.

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Copyright IronPoint Insurance Services, LLC | California License No. 0G87821 | PO Box 62436, Irvine, CA 92602 | 877.334.7646

IronPoint Insurance Services is an independent insurance agency licensed (#0G87821) with the California Department of Insurance. We are authorized agents for many A+ rated Arizona, California and Utah insurance companies. We provide consumers with online, phone, and in-person insurance services through our insurance company relationships. IronPoint Insurance Services, LLC offers multiple insurance quotes to provide consumers several options for their insurance products. We offer auto insurance through Mercury Insurance Group, Travelers Insurance Companies, The Hartford, MetLife Auto & Home, and Progressive Drive Insurance. We are authorized insurance agents for these companies and do not charge any fees for our services. If an IronPoint insurance agent trys to charge you broker or agency service fees for representing these companies, please contact us immediately.

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