As a business owner, you need to think about many things, and insurance should be on the top of that list. Having proper coverage can protect your business from going under, provide security, and save you a lot of money. However, just like with personal insurance, small business insurance can be challenging to understand.
At the same time, when choosing insurance, it’s essential to understand the policies and their terms. This is the only way to find the right coverage for your small business. There are many different types of small business insurances, and each of them has their specifics.
Additionally, every insurance company offers something different within their policies. Here, we will help you understand the costs of business insurance policies and what they do.
Average Costs of Small Business Insurance
When shopping around for small business insurance, chances are you‘re worried about the price. Naturally, everyone would want to know the exact cost of the policy. However, it’s difficult to give an exact number because there are so many factors that affect the price.
According to Insureon, the average cost of a Business Owner’s Policy, which bundles together general liability insurance and property insurance costs an average of about $600 per year. However, prices can change depending on your needs.
Factors That Affect Small Business Insurance Cost
The most important factors that affect your insurance price are the type of your company and the industry you’re in. If you are operating in a hazardous enterprise, you carry more risk, and your coverage price will instantly increase. For example, building skyscrapers is riskier than developing software, and estimates will be adjusted accordingly.
Some other factors to consider:
- Insurance agency pricing
- Company size
- Location of your company
- Company track record
- Loss of history
Best Small Business Insurance Options
The costs also vary from the type of insurance you get. Here are some of the most commonly purchased insurance policies for small businesses and their average prices:
General Liability Insurance
All companies should have general liability coverage to protect the organization from property damage and bodily injury claims coming from third parties. The costs of this kind of insurance range from $400 up to $600 every year.
Workers Compensation Insurance
If you have workers, then you need to have workers’ compensation insurance. You are required to have this insurance by law, and the premiums vary from the type of classification your business gets and several other factors. This coverage is usually about $550 per year.
Disability Insurance
Many states also require disability insurance for all businesses that have employees. This policy covers employees’ wages in situations when they suffer injuries or get struck by illness while at work. The payments for these policies are calculated by taking a percentage of the total payroll and vary based on many factors.
Unemployment Compensation Insurance
An unemployment compensation policy gives benefits to employees who lost their jobs without their fault. This type of coverage is also required in many countries, and the costs can vary greatly. However, the average fees are about 0.6% of the federal tax rate for most business organizations.
Commercial Auto Insurance
If a company works in transporting products, equipment, or as a part of service, personal auto insurance doesn’t cover employees driving those vehicles. This is why companies need to get commercial auto insurance to protect their employees and the organization itself from high costs. The costs of this kind of coverage vary depending on the number of vehicles, employees, and level of risk.
Health Insurance
Benefits are a significant part of an employee’s job. There are small business insurance plans on the market that are tailored to smaller businesses. Plans like these can offer you tax benefits and improve employee satisfaction. And if you’re wondering how much does small business health insurance cost, this depends on the percentage of the premium you will cover and the number of benefits you are providing.
Commercial Property Insurance
Every business has an office, building, or facility from which it operates. Your property and all of the items in it need to be secured from any loss. This kind of coverage covers the costs of replacing computers, electronics, furniture, inventory, trees, fences, and so on. The annual charges for this kind of coverage for small businesses are usually between $1,000 and $2,000.
Professional Liability Insurance
If your business doesn’t have any products, but you provide services, this kind of coverage is a good idea. It protects you and your employees from any malpractice or mistakes made at work. The costs range from $900 and up to $1800 per year.
Ensuring your business against potential risks is very
important. Make sure to analyze your business and see where those potential
risks are before investing. Bear in mind that these are just some of the
insurance policies you can buy, there are a lot more options available. Contact Melton
McFadden for more information on how we can help
your small business!
