Planning to purchase insurance for your small business?
In a country where almost 50 percent of small businesses fail within a decade, and at a time when a global pandemic is taking businesses to the cleaners, the importance of business insurance cannot be overstated. Business owners who had business interruption insurance before the COVID-19 pandemic struck, for instance, have a good chance of getting compensated for their losses.
But, just how much does small business insurance cost?
This is certainly one of the questions ringing through your mind, and you can’t seem to get an accurate answer. Well, were here to help.
Here’s a guide on how much you can expect to spend on insuring your business.
How Much Does Small Business Insurance Cost?
You’re probably looking for a ballpark figure, right?
Unfortunately, there’s no standard cost for commercial insurance. Every business has unique needs, which means the cost of insurance can vary greatly.
However, when most people ask this question, they’re generally looking for the cost of general liability insurance. This type of coverage protects your business against liabilities arising from a wide range of incidents, such as bodily injury, advertising injury, and medical payments. Unusual as it is, the general liability insurance also covers the landscaping and lawn care businesses.
In general, most small businesses pay about $500 a year for a general liability policy with a $1 million limit. Expect your cost to increase marginally as your limit increases.
Factors the Influence the Cost of Business Insurance
There are several factors that will determine the amount of money your business will pay to get adequate coverage. They include:
The Type of Business You Have
The nature of your business will have a big impact on the cost of insurance. This is because different businesses have different risks and risk levels.
A food service business, for instance, is a riskier business to run than a clothing store. If you’re in foodservice, there’s the constant risk of fire. There’s the risk that your food could cause stomach poising.
With a clothing store, what could go wrong? There’s the risk of fire, but it’s remote. Perhaps your biggest risk is burglary, but it can be eliminated if you set up your shop in a mall or shopping center with great security.
The riskier your business is, the higher your premiums.
Commercial insurance is higher in some states, lower in others.
In big cities, such as New York, insurance premiums are much higher than in a countryside town or rural area.
So, if your business is in a major metropolitan area, you just have to contend with the higher premiums, simply because the cost of living in your area is higher.
Additional Insurance Needs
General liability alone is not enough to adequately protect your business. You will typically need additional insurance policies.
For instance, if your business has digital operations, it’s advisable to purchase cybersecurity insurance. If you have employees, it’s mandatory to purchase workers’ compensation insurance. If your business is located in an area that has a high flood risk, it’s essential to purchase flood insurance along with property damage insurance.
The greater your insurance needs, the higher your cost of insurance goes.
Get Adequate Coverage for Your Business
So, how much does small business insurance cost? To recap, there’s no fixed figure for businesses. A lot will depend on the nature of your business, as well as your additional coverage needs. Whatever the cost is, though, it’s important to insure your business.
Stay tuned to our blog for more small business tips and insights.