Small business owners have to take many different steps to protect their companies, and one of the most important is securing insurance coverage. Insurance can help mitigate risks related to accidents, lawsuits, property damage, and other unforeseen events that could threaten a company’s financial stability. However, small business insurance can be expensive, and it’s important for owners to understand the average costs associated with different types of coverage. In this article, we’ll explore the average cost of small business insurance across various policies.
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General Liability Insurance
General liability insurance is one of the most common types of small business insurance. It covers claims for bodily injury, property damage, and advertising injury. The average cost of general liability insurance for a small business is around $500 per year. However, the cost can vary depending on factors like the industry, location, size of the business, and the risk level involved. Some businesses may pay as little as $200 per year for general liability insurance, while others may pay thousands of dollars.
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Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects businesses against claims of negligence, errors, or mistakes made while performing professional services. This type of policy is essential for businesses in industries like accounting, law, consulting, and healthcare. The cost of professional liability insurance varies widely by industry. For example, a consultant might pay between $500 and $5,000 per year, while a physician might pay between $15,000 and $25,000 per year.
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Business Owner’s Policy (BOP)
A business owner’s policy (BOP) is a bundled insurance policy that combines general liability insurance with commercial property insurance. The policy is designed specifically for small business owners and offers protection against many common risks. The average cost of a BOP ranges from $500 to $3,000 per year, depending on the size and scope of the business. Smaller businesses might pay closer to $500, while larger companies could pay up to $5,000 per year.
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Workers’ Compensation Insurance
Workers’ compensation insurance is a type of insurance that covers medical expenses and lost wages for employees who are injured or become ill due to their work. The cost of workers’ compensation insurance depends on several factors, including the size of the business, the industry, and the state where the business operates. On average, small businesses can expect to pay between $0.75 and $2 per $100 of payroll for workers’ compensation insurance.
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Commercial Auto Insurance
If your business owns or uses vehicles for work purposes, you need commercial auto insurance. This type of policy covers bodily injury and property damage caused by your vehicles, as well as theft and damage to your vehicles. The cost of commercial auto insurance depends on several factors, such as the number of vehicles and the driving records of the drivers. Small businesses with only one or two vehicles might pay as little as $1,200 per year, while larger companies with a fleet of vehicles could pay upwards of $10,000 per year.
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Cyber Liability Insurance
Cyber liability insurance is becoming increasingly important for small businesses in today’s digital age. This type of insurance protects businesses from losses related to cyber attacks, data breaches, and other online threats. The cost of cyber liability insurance varies depending on the size and type of business, as well as the level of coverage needed. Small businesses might pay anywhere from $500 to $5,000 per year for this type of coverage.
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Business Interruption Insurance
Business interruption insurance is designed to help businesses recover from financial losses resulting from unexpected disruptions, such as natural disasters or fires. This type of insurance can cover costs like rent and employee salaries while a business is closed. The cost of business interruption insurance varies depending on the size and type of business, as well as the level of coverage needed. Small businesses might pay anywhere from $750 to $10,000 per year for this type of coverage.
Overall, the cost of small business insurance varies widely depending on the type of policy, the industry, the size and location of the business, and the risk level involved. It’s important for small business owners to do their research and talk to insurance providers to find the best policies at the most affordable rates. By securing the right insurance coverage, small businesses can protect themselves against potential financial losses and keep their companies running smoothly.
