How much does small business insurance cost?

Business insurance is priced by underwriters who evaluate the specific risk profile of your company — not a flat national rate. The SBA's guide to business insurance lists the main coverage categories and notes that cost varies materially based on industry, size, and location. Two businesses in the same industry can quote very differently based on claims history, years in business, and coverage limits requested.

The main factors that drive your premium

• Industry / risk classification: A marketing consultant is rated very differently from a roofer or food manufacturer. Physical-risk industries (construction, manufacturing, transportation) command higher general liability and workers' comp premiums than desk-based professions.
• Annual revenue and payroll: General liability premiums are often quoted per $1,000 of revenue; workers' comp premiums are set per $100 of payroll in each job classification. Larger payrolls and higher revenue mean higher premiums.
• Number of employees: More employees = more exposure for workers' comp and employment practices liability.
• Location: State regulations, local litigation rates, and catastrophe exposure (flood zone, hail corridor) affect premiums for commercial property and liability coverage.
• Coverage limits and deductibles: A $1 million per-occurrence / $2 million aggregate general liability limit costs less than a $2 million / $4 million limit. Higher deductibles lower premiums.
• Claims history: A business with prior liability or property claims will pay more than one with a clean loss run.

Rough cost benchmarks by coverage type

• General liability (low-risk service business): Roughly $500–$1,500/year for a $1M/$2M policy at standard revenue levels, per the Insurance Information Institute.
• Business Owners Policy (BOP — GL + commercial property bundled): Often $1,000–$3,000/year for a qualifying small business; the bundle discount typically makes BOP cheaper than buying GL and commercial property separately.
• Workers' compensation: Set by state, job classification, and payroll. A low-hazard office rate might be $0.30–$0.50 per $100 of payroll; a roofing contractor classification can exceed $10–$15 per $100 of payroll.
• Professional liability (E&O): Typically $500–$3,000/year for a small professional services firm, depending on profession and coverage limit.
• Commercial auto: Depends heavily on vehicle type, driver records, and annual mileage. A single commercial pickup might run $1,200–$3,500/year.