How Much Does Small Business Insurance Really Cost?
Dan Levenson June 28, 2016
There isn’t any question that the cost of small business insurance is a major challenge when you have to stay within strict budget guidelines. The problem is you likely won’t really know off the bat what you’ll need to pay for various types of insurance to protect your small business. There isn’t any definite way to know since all premiums and policies differ depending on the type of coverage you need.
What you can do is find ways to save as much as you can by taking some basic steps into consideration. While it’s usually impossible to control the cost of premiums, you can at least reduce total cost of all policies by taking some smart actions.
On average, you may need several different insurance policies
Let’s look at the types of insurance you need, how much it costs, and methods to cut costs.
What Does General Liability Cost For A Small Business?
You can’t do without general liability insurance, regardless of whether you run a small or large company. It helps protect you against any risks to your financial welfare. But it all depends on how many risks your small business actually has. You may think you have few risks just because you have small infrastructure—this isn’t always the case.
In reality, you may have more risks than you think based on the nature of what you do. With this in mind, your liability insurance cost could vary from a small $500 per year to maybe several thousand dollars a year based on your audited liabilities.
A liability variation some small businesses use is errors and omissions insurance to protect against human error. Some small companies offer advice and consultation, and this helps protect you against a lawsuit if someone thinks you were in the wrong.
The aforementioned insurance usually falls in the same price brackets based on how high your risks are.
Property Insurance and Other Policies
You have the same situation with commercial property insurance since it all depends on the size of your building and the risks within. You can run a small business and perhaps operate a large facility that poses more risks than you initially realized.
If you’re working out of your home, you’d only have to get a homeowner’s policy to protect your property. In a situation where you’re just a sole proprietor, policies like workers’ comp insurance isn’t even necessary. Even commercial auto insurance is perhaps unnecessary if you don’t use any cars to conduct business.
What is becoming more necessary is insurance for security breaches in a time when cyber threats keep increasing. A data breach could easily bankrupt your small business without protection, so it’s worth looking into what’s called cyber liability insurance. Sometimes you can get this covered through umbrella insurance policies.
Ways to Save Money on Insurance
As mentioned above, bundling is one good way to cut down on costs when you need multiple insurances. Doing this makes renewing insurance easier rather than paying extra fees each year.
Talk to your insurance company about raising your deductibles as well, which frequently lowers premiums. An insurance agent can additionally review all of your insurance policies once a year and see which ones you may no longer need.
Simply reducing risk in your small business generally lowers premiums anyway. Visit the U.S. Small Business Administration website to help give you tips on how to better manage your risks. Additionally, you can contact us here at InsureYourCompany.com so we can help you make the right decisions in insurance and other documentation to help your business succeed.