Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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small business insurance cost

It’s difficult to evaluate small business insurance cost exactly because it’s calculated according to the type of business, location of the business, number of employees, gross revenue, payroll and type of business insurance needed. The level of risk involved with the particular business also has an overall effect on the cost of the insurance obtained.

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In fact, the only way to get a true valuation of small business insurance cost is to go online or talk to an insurance broker. It’s only when all the necessary information is given and assessed regarding the business that a precise quote can be determined.

Combining Coverage

Although it may not be possible to give exact insurance quotes without having specific information, customers should be aware that obtaining sufficient coverage could be expensive. In an effort to reduce expenses, businesses may sometimes choose to purchase policies from different insurance companies.

However, this could actually be more costly in the long run because when purchasing from different companies, business owners may find that there are gaps in the coverage (some important area isn’t covered), or they may find that they’re making excess payments for the same coverage (overlaps).

There could also be the problem of one company claiming that the other company is responsible for coverage. While they’re disputing, the insured is caught in the middle and either ends up with the insurer that pays for less coverage or worse, nothing is done to cover the business while the insurers continue their dispute.

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Buying Only the Insurance Needed

When referring to small business insurance, it’s not just about the cost of the premium paid. Costs can include:

– Paying out unnecessary money for coverage that isn’t needed
– Not having enough coverage for potential claims that result in out-of-pocket payments that could severely deplete company finances (under insured).

Above all, business owners must be knowledgeable about the type of insurance needed in order to eliminate the possibility of not being properly insured. The first place to start is to learn what kind of basic insurance is

small business insurance cost

required by the laws of the business state and obtaining the best and most economical quotes for that insurance.

Next, it might be necessary to speak with an insurance broker regarding the type of business owned so the broker can help to ascertain what specific coverage will be needed.However, different agencies charge different rates for the same type of insurance coverage.

Therefore, it’s crucial that business owners shop around and compare prices before purchasing any insurance. Most experts agree that it’s more beneficial to purchase a package from one insurance company (Business Owner’s Policy or “BOP”) where several types of coverage are included under one policy, rather than purchase different types of insurance separately from different insurance companies.

Estimations of Small business Insurance Premium Costs

Keeping in mind that these are generalized figures, depending on the type and size of the business, premium costs could be as follows:

General Liability

Protection from third-party injury on the premises and property damage that can result in lawsuits. For sole proprietorships and single employee operations, the approximate costs can be approximately $150 – $1,300 per year for $1,000,000 – $2,000,000 in coverage. Rates for companies with two or more employees ranged from $250 – $1,400 per year for the same amount of coverage.

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Workers Compensation

Coverage for employees who are injured or become sick as a result of working on the job. Each business is evaluated to determine the risk classification they fall within to properly assess the potential for workplace injury. The premium decided is arrived at by charging a certain percentage of each employee’s salary along with considering the risk of sickness and/or injury involved in each employee’s position. Thus, depending on the size and type of business, employers could pay approximately $150 – $3,000 per year per employee.

Health insurance

There’s a vast difference in the prices paid for health insurance because of the various types of insurance (i.e., PPO, HMO, POS) and whether the coverage is basic or comprehensive. For employers, the coverage rates range

small business health insurance

from $150 – $300 per month per employee and this is for basic health insurance. When considering comprehensive health insurance that includes dental, vision, disability, etc., business owners are faced with paying upwards of $1,000 or more per month per employee.

Another determining factor on small business insurance costs is the amount of claims that have been submitted in the past. Obviously, the business that has submitted few or no claims will pay less for insurance coverage than the business that has submitted multiple claims. Also taking steps to increase job security and safety goes a long way in reducing insurance bills because this minimizes the chance for sickness and injury.

After Small Business Insurance has been Obtained

It’s highly advisable that insurance policies be reviewed regularly, generally on an annual basis and definitely when there are changes in the business structure. Also, business owners should keep up with any and all changes within their local insurance laws so they can then review their policies and update accordingly if necessary.

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Conclusion

Keep in mind that the cost assessments given are only estimations and that once all information is taken into consideration, business owners may find that their premium payments differ significantly. The main thing that customers should be prepared for is the fact that in order to acquire sufficient coverage, it may be necessary to accept and pay the expense.

It’s better to pay the money in premium payments than not pay it and experience severe financial losses or be totally annihilated as a result of paying the money out to cover lawsuits and other damages.After all, mistakes happen and accidents do occur and protecting a business from potential risks is a large part of the foundation for success. Save time and money by comparing quotes online. Enter your zip code below to begin!