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How Much Does Business Insurance Cost Per Month?

Americans have an entrepreneurial spirit that makes the economy go ‘round. There are 33.2 million small businesses in the county, which have created 63% of all new jobs in the past 20-plus years. And we’re not slowing down: In 2021, new business owners filed a record-breaking number of applications. They’re about to discover all the thrills and challenges of new business ownership—and they’ll soon start asking, “How much does business insurance cost per month?” The answer is complicated—it depends on the business, industry, types of coverage, and more.

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Types of Business Insurance

The first factor that goes into your calculations of the average insurance cost for small business is which types of insurance you’ll need.

General Liability Insurance

General liability insurance, also called business liability insurance, is the most basic type of insurance that you should factor into your typical business insurance costs. It covers you and your business for:

  • Property damage you cause, for example, if your tree-trimming business damages the roof of a home.
  • Bodily injury that occurs as a result of your product or services, for example, if a customer slips and falls in your store.
  • Personal injury, which includes things like false arrest, invasion of privacy, and libel and slander.
  • Advertising liability, which includes copyright infringement and idea misappropriation.

Each of these claims might require different coverage from your insurance. General liability insurance usually covers:

  • Medical expenses
  • Costs to replace or repair property
  • Administrative costs
  • Court costs if your business is sued
  • Judgments and settlements against your business

There are also plenty of things that general liability insurance doesn’t cover, including:

  • Vehicle accidents
  • Employee injuries
  • Punitive damages
  • Intentional acts, like knowingly publishing false information or violating others’ rights
  • Illegal acts
  • Poor workmanship or failure to meet quality standards

Property Insurance

Property insurance covers damage to your company’s building and the property within it. It also sometimes covers the personal property of others. It’s important for most businesses with physical locations, equipment, and inventory. Here’s what it can cover:

  • Your building, including additions, upgrades, and permanently installed equipment
  • Landscaping and outdoor fixtures
  • Your furniture, indoor fixtures, and machinery, including computers
  • Stock and inventory stored on the property
  • Documents and files
  • Personal property you own and use for your business
  • Others’ personal property that you’re borrowing, storing, or caring for

Examples of claims you can make under your property insurance policy include:

  • Fire or water damage
  • Vandalism
  • Theft
  • Lost income due because you’re unable to operate

Workers Compensation

Workers compensation insurance covers work-related injuries and illnesses, protecting you from liability if an employee is injured on the job. Most states require you to have workers comp insurance if you have employees, which is good news for small businesses: If they have a claim, employees must go through the workers comp system instead of the civil system. Workplace injuries can happen in any physical environment, so this is often an important type of protection to add to your average business insurance costs. Some examples include:

  • Slip and fall accidents
  • Transportation accidents
  • Contact injuries, like being caught in machinery
  • Chemical burns
  • Repetitive strain
  • Hearing loss
  • Occupational illnesses like black lung or asbestosis
  • Heart attacks and hernias (for some professions)

If an employee is injured on the job or becomes ill as a result of their job, workers comp covers:

  • Medical care
  • Rehabilitation and ongoing care
  • Lost wages
  • Funeral costs and death benefits

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions (E&O) insurance, covers businesses for negligence related to their services that isn’t covered by general liability insurance. Small businesses that provide professional services, like consultants, accountants, and marketing and advertising agencies, usually need this type of insurance. When doctors and lawyers use this type of insurance, it’s called malpractice insurance. Because the coverage you’ll need depends on your business, E&O insurance policies are usually customized. In general, they might cover:

  • Negligence
  • Misrepresentation
  • Errors of omission
  • Breach of duty

Commercial Auto Insurance

If you use any vehicles in the course of doing business, you’ll want to add commercial auto insurance to the cost of your business insurance per month. It covers business-owned vehicles that are damaged by yourself or an employee, as well as any liability coverage for the other party, including medical bills. Many states require businesses with vehicles, or with employees who use their own vehicles for work, to carry a certain amount of coverage, so check your local laws. In general, commercial auto insurance could cover:

  • Damage to someone else’s property
  • Damage to your own vehicle caused by an object like a curb or another car
  • Damage to your vehicle caused by fire or theft
  • Medical or funeral expenses for you, your employees, the other driver, and passengers
  • Additional coverage in case you’re hit by an uninsured or underinsured motorist
  • Lawsuit liability coverage

Cyber Liability Insurance

Cyber liability insurance covers businesses for data breaches and other cyber-related incidents that happen on their systems. It’s becoming more and more important as businesses take their operations online and cyber crime increases. Depending on whether you have first-party, third-party, or cyber crime coverage, it may cover:

  • Damages your business suffers as a result of a cyber crime, like the costs of incident response, damage to your system, and interruptions to your business operations
  • Damage you cause to others as a result of a cyber crime on your systems, like regulatory fines and media liability
  • Theft of money from your bank account, unauthorized use of your business credit card or phone lines, and corporate identity theft

Factors Affecting Insurance Cost

By now you can probably tell that the answer to the question “How much does business insurance cost per month?” isn’t as straightforward as you might think. In addition to the types of insurance you might need, consider these factors.


Insurance costs are a reflection of the risks they cover. That means the average price for small business insurance will be higher for industries like construction and manufacturing, which have more physical risks.


Some areas of the country, like New York or California, are more litigious than others, such as Oklahoma or Indiana. That means that they are more likely to turn to lawsuits and litigation to settle disputes, which creates an environment that can increase the cost of insurance, especially general liability, workers compensation, and commercial auto.Additionally, some areas are much more prone to natural disasters such as tornados, wildfires, hurricanes, or other major events. If you’re insuring property in disaster-prone areas, the cost of property insurance will be higher.

Business Size

Larger businesses with more employees, more assets, and more revenue will face higher insurance costs. This is because larger businesses are exposed to more risk due to their scale (more products being made, more customers, more property exposed to loss, more cars on the road, etc.).

Coverage Limits

The more potential risk an insurance company is covering, the higher the cost of business insurance per month will be. For example, if you have $5 million worth of property you need covered, your monthly premium will be higher than if you only had $1 million worth of property.


Your deductible is the amount you pay before your insurance policy kicks in. It can be either a flat rate or a percentage of your claim. As with all insurance policies, higher deductibles equal lower premiums and lower deductibles equal higher premiums.

Claims History

Insurance carriers can request your “loss runs,” which are reports on how many claims you’ve made under your policies. They’re similar to credit reports and help carriers evaluate the risk involved in insuring your business. If you have a history of claims that appear on your loss runs, you may face higher insurance costs.

Business Insurance Cost Examples

Since the question “What is the average cost for small business insurance?” varies so widely, it’s helpful to have some examples of how costs play out depending on your location, type of business, level of risk, and so on.

General Contractor in North Carolina

Business: General contractor in North Carolina that does commercial property remodeling and repairs and also builds several new homes per year. The business has two owners, no employees, and only subcontracted labor.

Coverage: General liability

Premium: $5,000 per year

Welder in Florida

Business: A mobile welder based in Florida that does work on fences, roll-off dumpster repair, and miscellaneous commercial projects. One owner-welder with a welder-helper employee.

Coverage: General liability

Premium: $1,550 per year

Retail Store in California

Business: A small wellness store in California that sells makeup, skin care, health food, and wellness products. The business has both a retail store and an online store.

Coverage: General liability, property coverage for inventory, and cyber liability

Premium: $1,950 per year

Apartment Complex in Florida

Business: An older apartment complex located in Florida within 10 miles of the coast, whose replacement cost is approximately $12.5 million. There are 12 smaller buildings each with roughly eight units.

Coverage: General liability and property insurance

Premium: $110,000 per year

Estimating Your Business Insurance Costs per Month

The explanation and examples above should help you figure out how much business insurance costs per month. The best way to determine your actual cost is to talk to an expert, but before you do, have an idea of:

Which policies you need: Take a look at the list above, do your own research, and talk to peers to determine which policies you need. The majority of businesses need at least general liability insurance.

What limits you need: The dollar amount of coverage you need depends on the size and type of your business, including your number of employees and the value of your property. A small business won’t need a $25 million general liability policy, and a large business needs more than a $1 million policy.

Get a Quote

Contacting an insurance agent with expertise in your industry and multiple insurance carrier options can help you determine a good policy for your risk tolerance and budget. Always compare coverage, limits, and deductibles alongside cost to be sure you’re getting everything you need. Get started with LandesBlosch today and we’ll put our decades of expertise to work protecting your business.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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