How Much Does Small Business Insurance Cost in 2025?

One of the first questions new business owners ask is: “How much will insurance cost?” The answer depends on many factors, but understanding typical costs helps you budget appropriately.

Average Small Business Insurance Costs

Here’s what small businesses typically pay for common coverage types:

Total typical cost: Most small businesses pay between $1,000 and $5,000 per year for basic coverage. Complex operations or higher-risk industries may pay $10,000 or more.

Factors That Affect Your Premiums

Industry and Risk Classification

Your industry is the biggest factor in pricing. A roofing contractor pays far more than an accounting firm because the risk of injury claims is dramatically higher.

Higher-risk industries:

• Construction and trades
• Manufacturing
• Transportation
• Healthcare

Lower-risk industries:

• Professional services
• Technology
• Retail (non-food)
• Consulting

Business Size and Revenue

Larger businesses with more revenue generally pay more because they have:

• More assets to insure
• More employees (workers’ comp exposure)
• Higher potential liability claims
• More customer interactions

Location

Where you operate affects costs significantly:

• State regulations - Workers’ comp rates vary widely by state
• Natural disaster risk - Coastal areas pay more for property coverage
• Crime rates - Higher crime areas mean higher property premiums
• Legal environment - Some states have more lawsuits than others

Claims History

Your past claims directly impact future premiums. Businesses with clean claims histories qualify for better rates. Even one significant claim can increase premiums for years.

Coverage Limits and Deductibles

Higher coverage limits mean higher premiums. But don’t underinsure to save money—a $1 million claim against a $500,000 policy leaves you paying the difference.

Higher deductibles lower premiums but increase your out-of-pocket costs when claims occur.

Cost by Business Type

Home-Based Business

• Typical coverage: General liability, professional liability
• Annual cost: $300 - $1,000
• Note: Homeowner’s insurance usually excludes business activities

Retail Store

• Typical coverage: BOP (GL + Property), workers’ comp
• Annual cost: $1,500 - $4,000
• Factors: Inventory value, foot traffic, employee count

Restaurant

• Typical coverage: BOP, workers’ comp, liquor liability
• Annual cost: $3,000 - $10,000+
• Factors: Seating capacity, alcohol service, delivery operations

Contractor/Tradesperson

• Typical coverage: General liability, workers’ comp, commercial auto, tools/equipment
• Annual cost: $2,000 - $8,000+
• Factors: Trade type, employee count, project sizes

Professional Services (Consultant, Accountant)

• Typical coverage: Professional liability, general liability
• Annual cost: $1,000 - $3,000
• Factors: Client size, contract values, specialty area

Technology Company

• Typical coverage: E&O, cyber liability, general liability
• Annual cost: $1,500 - $5,000
• Factors: Data handled, client contracts, software vs. services

Ways to Lower Your Insurance Costs

Bundle Policies

A Business Owner’s Policy (BOP) bundles general liability and property coverage at a discount—typically 10-15% less than separate policies.

Increase Deductibles

Raising your deductible from $500 to $2,500 can reduce premiums by 10-25%. Just ensure you can afford the higher out-of-pocket cost.

Implement Safety Programs

Documented safety programs, employee training, and risk management practices can earn premium discounts, especially for workers’ comp.

Pay Annually

Many insurers offer 5-10% discounts for paying the full annual premium upfront instead of monthly.

Shop Around Regularly

Get quotes from multiple insurers every 2-3 years. Loyalty doesn’t always pay—new customer discounts can be significant.

Work with an Independent Agent

Independent agents represent multiple insurers and can find the best combination of coverage and price for your situation.

The True Cost of Being Uninsured

Skipping insurance to save money is false economy. Consider these potential costs:

• Average slip-and-fall claim: $20,000 - $50,000
• Professional negligence lawsuit: $50,000 - $500,000+
• Data breach (small business): $120,000 average
• Employee injury claim: $40,000+ average
• Fire/total loss: Business closure

Insurance premiums are predictable monthly expenses. Lawsuits and disasters are not.

Get Your Customized Quote

Every business is unique. The best way to know your actual costs is to get quotes based on your specific:

• Industry and operations
• Revenue and payroll
• Location
• Coverage needs

Compare at least three quotes before deciding, and review your coverage annually as your business evolves.