Are you worried about how much business insurance costs? The price of business insurance is around $600 to $1,700 a year for a small business. But exactly what you pay will depend on the amount and type of policy you purchase, the risks, and the needs of your company.
So if you are thinking about obtaining BOP insurance (Business Owners Insurance), here we tell you what factors influence the cost of business insurance so that you can choose the most convenient option to protect your assets.
Factors that influence the cost of business insurance
There are many factors that determine the price of business insurance. Among them:
- The type of business. The price of your rate will depend on the degree of risk involved in the commercial operations of your business. If you’re a freelancer working in a coworking space, a general liability policy can cost you $40–$50 a month and is the only policy you’ll need.
- The type of profession. The type of work you do and how many people or machinery you are involved in doing it will define your level of risk. If you are a construction contractor with high accident exposure, you could pay more than someone who only provides services from home.
- Income. The higher the income your company receives, the more the insurer will have to pay for possible losses to property and assets; Likewise, it must replace the lost wages of your workers in the event of interruption of your operations.
- Coverage limits. If your policy has high limits, for example up to $1 million or $2 million, your premiums will be higher.
- Size of your company. If your company’s premises are large and also have expensive equipment, machinery, furniture, and technology, you will pay more than a small service store that requires few elements to operate. For example: A separate policy for a business with 10 to 15 employees should be in the range of $1,200–$2,000 per year.
- The location of your company. Depending on the city or state where you operate commercially, you will pay lower or higher rates. For example, in California and New York, you can pay up to three times what you would pay in Texas.
- The number of employees. The more people who work for your company, the more likely accidents will occur or get injured, therefore, you will pay much more for your policy.
- The claims history. If you have had covered liability losses and made claims on your policy, the price of your business insurance will be higher than someone who has never had a claim.
- The type of coverage. If your business needs additional coverage, each policy you add to your insurance individually or in a package will make the total price of your business insurance more expensive monthly.
- The deductible. If the deductible on your contractor general liability insurance policy is high, you will pay lower premiums because you will assume more risk. On the other hand, if you choose a low deductible, you will pay less out of pocket, but your premiums will be more expensive.
- The type of insurer. An insurer with many branches and extensive claims experience may have higher rates than a company that only operates in your city. Everything will depend on whether the insurance company you chose offers packages to combine your insurance, if it offers you discounts, or if it includes higher coverage limits than another for a lower price. The key is to ask for several quotes from several different companies and compare prices.
Insurance prices for businesses or companies
Generally, an entrepreneur can pay for:
- General Liability: $42/month
- Workers’ compensation: $45 per month
- Professional liability: $59 per month
Business General Liability Insurance Price
| Total revenue | General liability policy limits $1 million per occurrence. 2 million dollars in total. |
|---|---|
| $250,000 in income | $1,289 for the annual premium |
| $500,000 in income | $2,365 for the annual premium |
| 1 million dollars in revenue | $4,232 for the annual premium |
| 2 million dollars in revenue | $7,455 for the annual premium |
| 3 million dollars in revenue | 10,227 for the annual premium |
How to get the best price on insurance for businesses or companies?
- Evaluate the risk level of your business. Could you face a lawsuit? A lawsuit with a client could easily exceed $300,000 in attorney fees and awards. General liability, in addition to being necessary to pay for injuries to workers or people who are injured at your business, is a requirement in most states.
- Add up all your assets. Does your business depend on expensive machines and equipment? Is your location your own? It is best to obtain business owner insurance to protect your assets with limits that cover your entire assets and operations.
- Analyze the area of your business. If your business is in a location at risk for theft or in a disaster zone such as storms or fires, you should consider obtaining commercial property insurance to cover possible damage or loss to everything in your business.
- Do you have capital saved? If you do not have enough savings to continue paying the rent for your premises if your operations are interrupted because you did not meet some requirements, you should think about obtaining a policy that covers that gap to avoid going bankrupt.
- Find an agent who will support you. An advisor can help you combine insurance, establish the limits that best suit you, and evaluate your business risk to find the best policy for your needs.
- Is your business growing? If you plan to buy new equipment or improve your business technology, it is a good time to protect your investment.
- Do you handle sensitive data? If your company carries out digital operations and may be more exposed to being hacked or you may lose valuable information due to a virus, it is necessary that you purchase an additional policy to the general liability for identity theft or fraud.
- Does your business use or rent many vehicles? Commercial auto insurance coverage can help protect you from possible damages that may occur in an accident while you are carrying merchandise or transporting clients.
- Think about the real needs of your company. Always choose a policy that can insure everything that makes your business run, you never know what might happen along the way.
- Reevaluate your options. Businesses change; Sometimes your business model changes and, therefore, you may no longer have the same number of employees or no longer need machines, so adjust your policy to the present and save yourself unnecessary costs.
