Business Insurance Costs for Different Coverages (With 2023 Rates)

Thang Truong
Thang Truong
Updated on:

There are so many things to figure out when you launch a new business. How to make your product stand out, how to increase revenue, how to lead with vision. Getting business insurance is not a fun part of starting a business, but it is necessary. You don’t want to overpay for the business insurance policies that you need to protect your business. Let’s find out how much business insurance costs on average.

Business insurance costs for different coverages in 2022

What you pay for business insurance depends on a number of factors. The first one is the type of business insurance coverage you get. These are the averages of some of the most common types of business insurance. 

Type of insurance coverageAverage cost
General liability $65 a month
Business Owners Policy$99 a month
Professional Liability$97 a month
Workers compensation$38 a month per employee
Cyber liability insurance$124 a month
Commercial umbrella insurance$1,500 a year
Commercial auto insurance$750 to $1,200 a year per vehicle
Employment Practices liability insurance$800 to $3,000 a year
Directors and Officers insurance $600 a year
Commercial property $742 a year

What is the average cost of business insurance?

Small business owners need to watch every dime. It may be tempting to skip business insurance entirely so you can save some money, but that’s a really bad idea. You’re just leaving yourself open to lawsuits. 

On the plus side, business insurance isn’t usually expensive. On average, small businesses pay $2,828 a year or $236 a month for business insurance.

There are several types of business insurance that your business may or may not need. You probably don’t need every type of business insurance. Here are the most common types of insurance, what they protect you from, and the average cost. 

Regardless the type of business insurance you need, the only way to make sure you get the cheapest business insurance policy is to shop with a few companies or compare several quotes with a digital broker like CoverWallet.

How much does general liability insurance cost?

If you can only afford one type of business insurance, general liability should be it. It protects you from claims related to third party bodily injury and property damage. It also covers advertising injury, copyright infringement and reputational harm, which could definitely come in handy in today’s social media obsessed world. If your customer slips and falls and breaks an ankle while walking across your place of business, general liability insurance has you covered.

The average cost of general liability insurance is $780 a year, or $65 a month, although it depends on how big your business is and what you do. 

>>MORE: How Much does General Liability Insurance Cost?

How much does professional liability insurance cost?

Professional liability insurance covers you in the event that you provided professional services and someone sued you because they felt you negatively impacted them financially. It’s also often called errors and omissions insurance, or E&O insurance, or malpractice insurance in some industries like healthcare and legal.

Additionally, professional liability insurance covers you when the plaintiff can prove that you were negligent in some way, such as if you did not provide some sort of service or made a mistake. A common example is if you’re an accountant and a clerical error led to a client losing thousands of dollars.

On average, small businesses pay $97 a month or $1,164 a year for professional liability insurance policy. However, it varies wildly depending on the industry and the number of professional employees you have on staff. A surgeon has to pay hundreds of thousands dollars a year for a malpractice insurance policy .

>>MORE: How Much does Professional Liability Insurance Cost?

How much does commercial property insurance cost?

Commercial property insurance covers the space where you do business and the items inside and around it. It protects your business from losses due to fire, theft, vandalism, and natural disasters caused to the property where your business is located. Furthermore, if you rent or lease space, the landlord will require it. 

On average, a small business pays $742 a year or $62 a month for commercial property insurance.

>>MORE: Best Commercial Property Insurance Companies

How much does business owners policy insurance (or BOP) cost?

A business owners policy provides protection for all major property and liability risks in one package, but usually sold at a lower cost than it would be to buy the policies separately. It includes:

  • Property insurance for any buildings you own
  • Coverage from losses due to theft, fraud, and forgery
  • Business interruption insurance
  • Liability protection in case your business causes someone harm

A business owners policy combines general liability insurance with commercial property insurance. You can attach options like cyber liability or employment practices liability depending on what insurance company covers you. 

The average cost of a business owners policy (abbreviated BOP) is about $1,200 a year or $99 a month. 

>>MORE: Best Business Owners Insurance (BOP) Companies

How much does workers compensation insurance cost?

Almost every state requires workers compensation insurance if you have employees. Some require it if you have even one employee. The only state that doesn’t require it at all is Texas. Workers compensation protects you and your employees in case they are injured on the job. It will cover medical costs, lost wages, and even retraining if the worker can no longer to continue to do the job he/she was hired for. There’s a formula to determine how much workers compensation will cost you:

Experience rate modification X class code rate X payroll/100 = premium. 

The experience modification rate is how your business compares to other similar businesses in your industry. If you have several workers compensation claims, your EMR rate is higher and you’ll pay more for workers compensation insurance. If you have a great safety record and almost no one ever gets hurt, your score will be lower, and you’ll pay less. 

Class codes are four-digit numbers, and they indicate what kind of job the employee does. Each class code is assigned a rate, with careers exposed to more risks getting a higher rate. There are about 800 class codes altogether, and they cover everything from egg farmers to long-haul truckers who carry explosives. You can read the entire list here. The higher the level of risk, the more you’ll pay in workers compensation insurance. 

The average cost of workers compensation insurance is $3,085 a year or $257 a month.

>>MORE: How Much does Workers Compensation Insurance Cost?

How much does commercial auto insurance cost?

If you use cars or trucks in order to perform work (not including commuting back and forth) you’ll need commercial auto insurance. If you don’t get it and you get into an at-fault accident, your personal auto insurance will deny coverage if they found out you used your vehicle for work. 

The average cost of commercial auto insurance is somewhere between $600 and $2400 a year, per car. 

Other types of vehicles:

  • Semi: average cost: between $8000 and $12,500
  • Cargo van: between $3,300 and $6200 a year
  • Limos: between $4000 ad $6000
  • Cab: between $5000 and $10000

Other types of business insurance your business may need

Directors and officers:  Directors and Officers insurance, also known as D&O insurance, protects your executive officers if they’re sued over decisions they make on behalf of the company. If you hire experienced executives, they will often insist you have D&O insurance. 

>>MORE: Best D&O Insurance Companies

Inland marine: Although it sounds like insurance you would need if you’re a deep-sea diver, inland marine insurance covers your materials and equipment while they are being transported on land. Property insurance only covers your equipment while it’s on your property. Sometimes inland marine can be purchased an an add-on, and sometimes it’s a separate policy. It depends on the insurance company. 

>>MORE: Best Inland Marine Insurance Companies

Builders’ risk: Builder’s risk covers buildings under construction. It protects such projects from damage by:

  • Lightning
  • Fire
  • Hail
  • Explosions
  • Vandalism

It also protects the supplies and materials on the site, and the documents and data pertaining to the project. It won’t cover you if the building collapses due to faulty construction, however. 

The average cost of builders risk insurance is between 1% and 5% of the total cost of the project. 

Business interruption insurance: Business interruption insurance was in the headlines last year, as many extremely angry business owners discovered that their policy did not cover pandemics. Business interruption insurance is supposed to help a business pay its bills if it has to close due to a disaster, like a fire. It also covers things like employee wages, rent, mortgage and taxes. 

So far, eleven states have introduced legislation to require insurance companies to retroactively pay for the losses due to the pandemic. 

>>MORE: Best Business Interruption Insurance Companies

Cyber insurance: Now that everything is done online, a whole new set of threats have threatened businesses small and large. Ransomware attacks are when hackers hold a company’s data hostage until they are paid a ransom, sometimes demanding millions of dollars. You may remember the attack on Colonial Pipeline last year, and these sorts of attacks are increasing.  Cyber insurance protects a company’s data and assets that could be lost during an attack or a breach. It also protects you from liability if customers sensitive information is hacked. 

>>MORE: Best Cyber Insurance Companies

Employment practices liability insurance (EPLI): This protects you from lawsuits filed by former employees, usually for discrimination or wrongful termination. If your company is large and has deep pockets, you will want to look into this insurance. 

>>MORE: Best Employment Practices Liability Insurance Companies

How to find cheap business insurance

  1. Shop around: The key to finding the best price for an insurance policy is to shop around. This goes for any policy: home, auto, business, etc. Prices vary among providers, and if you already have a policy, you should still shop around for a better policy once a year or so. 
  1. Bundle. If you buy multiple policies from the same company, you usually get a discount of 10% or so. Business owners should consider bundling general liability policies with commercial property, known as a business owners policy. This combination is less expensive than if you were to buy the policies separately. 
  1. Raise your deductible. Raising your deductible can save you some money in montly costs. Just make sure you can meet the deductible if you need it. 
  1. Manage risks: Make sure you provide a safe working environment—no wet floors, no cords lying around, safe lighting in parking lots. This will go a long way to preventing claims in the first place.

>>MORE: Business Insurance: Cost, Coverage, & Providers

What affects how much I pay for business insurance?

The cost of your insurance is affected by several factors, including:

  • Industry
  • Location
  • Number of employees
  • Payroll
  • Revenue
  • Claims history
  • How much experience you have in your industry

Insurance companies are very happy if they never have to pay any claims. The greater the likelihood of a claim, the more expensive your insurance will be. You can reduce your risks by providing a safe work environment, making sure equipment is safe and up to code, and any hazards are cleaned up. 

How much business insurance coverage do I need?

How much insurance you need depends on how large your business is, where it is and what you do. For some types of insurance, there are state minimum requirements you need to adhere to, such as commercial auto and workers compensation. For others, like general liability, you can ask a broker or an agent how much insurance businesses like yours have and what they recommend. 

Is all this insurance really necessary?

The good news is that you won’t need all of these policies. You can probably just get a general liability policy to protect yourself against bodily injury and property damage. If you have employees, you’ll need workers compensation insurance. 

If you act in a professional capacity towards clients, such as doctors, lawyers and accountants, you should have professional liability insurance. 

That may still seem like a lot, but you’ll be happy you have insurance if someone files a claim. 


The cost of business insurance is generally quite reasonable, and much less than the cost of a lawsuit. If something unexpected happens, you’ll be very glad you have insurance. 

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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