When you run a business, no matter how small, you need to protect it against various threats that could occur on a daily basis. Many different components of your small business need coverage, including your employees, your inventory, and more. That's why having the right small business insurance is essential.
Fortunately, a local independent insurance agent can help you get set up with affordable small business insurance. These agents can shop and compare small business insurance costs from several reputable carriers for you. But first, you can use our guide to the average insurance costs for a small business in 2025 to find out how much you can expect to pay.
Key Takeaways - Small Business Insurance Cost in 2025
- Average small business insurance costs in 2025 range from $500–$1,207 annually, with policy type influencing price; for example, general liability averages $500/year, while cyber insurance averages $1,740/year.
- Insurance costs vary widely by business size and type, with solo consultants paying under $100/month, small teams averaging $885–$1,767/year, and higher-risk businesses like catering companies spending around $5,000/year.
- Key cost factors include industry, location, number of employees, payroll size, claims history, and coverage limits and deductible, all of which significantly impact premium rates.
- Bundling multiple policies with the same provider can lead to savings of 20% or more, and paying annually or installing risk-mitigation measures (like stronger cybersecurity) can further reduce costs.
- Smart strategies to lower premiums include paying annually (up to 15% savings), raising deductibles, and boosting risk management efforts, such as adding security systems or implementing employee safety programs.
How Much Does Small Business Insurance Cost?
Currently, most small businesses pay between $500-$1,207 annually for small business insurance. However, the average cost of small business insurance can vary considerably depending on the type and amount of coverage your unique business needs. Before getting coverage for your company, you've likely asked, "How much does insurance cost for a small business?" The chart below details the average monthly and annual cost of small business insurance premiums by policy type.
Average cost of small business insurance premiums by coverage type
| Business Insurance Policy | Average Cost Per Month | Average Cost Per Year |
|---|---|---|
| General liability insurance | $42/month | $500/year |
| Business owner's policy (BOP) insurance | $57/month | $684/year |
| Workers' compensation insurance | $45/month | $540–$600/year |
| Commercial property insurance | $67/month | $804/year |
| Professional liability/errors & omissions insurance | $61/month | $732/year |
| Cyber insurance | $145/month | $1,740/year |
| Commercial auto insurance | $147/month | $1,764/year |
What Are the Main Factors That Affect the Cost of Small Business Insurance?
The cost of business insurance for a small business can be affected by several different factors, including the following:
- Business type/industry: Higher-risk industries (e.g., construction and restaurants) typically cost more to insure than lower-risk industries due to the greater threat of costly disasters that the insurance company would have to pay out claims for.
- Location: Regions prone to natural disasters, such as those along the coast, and those with higher crime rates often face steeper premiums on their small business insurance policies.
- Number of employees and annual payroll: Having more employees to protect and a higher annual payroll means a greater risk for the insurance company, which often translates to higher premiums.
- Claims history: Filing small business insurance claims in the past almost guarantees higher premiums going forward.
- Coverage limits and deductible: The more coverage your small business needs and the lower your policy deductible, the higher your premium rate is likely to be.
- Industry-specific risk profiles: Policies needed for specific industries, such as various types of liability insurance or cyber risk insurance, can increase the overall cost of your small business policy.
An independent insurance agent can help you find cheap small business insurance regardless of your industry.
How Bundling Coverage Can Lower Insurance Costs for a Small Business
Many small business insurance companies offer discounts for bundling your coverage. If you get more than one type of policy through the same carrier, you're likely to receive a discounted premium rate on each one. Bundling discounts can offer significant savings, sometimes as much as 20% or more.
Additionally, many insurance companies offer small business insurance discounts for paying your premiums in full annually rather than in monthly installments. Installing risk mitigation features can help reduce your policy's premiums as well. For example, strengthening your company's computer security systems can help reduce your cyber liability risk, which can lead to coverage savings.
Three Smart Cost-Saving Strategies for Small Business Insurance
You can easily reduce the cost of your small business insurance by doing any of the following:
- Pay premiums annually: Choosing to pay your small business insurance policy's full annual premium upfront in one lump sum means less work and risk for the insurance company, which can translate to savings of up to 15% for you.
- Raise deductibles: One proven way to reduce your small business insurance premiums is to raise your deductible amount. However, keep in mind that this creates a higher out-of-pocket risk, since your business would have to pay more of its own money before receiving any reimbursement when filing a claim.
- Improve risk management: Increasing your small business's security on several fronts, such as by adding burglar alarms, implementing employee safety programs, and utilizing telematics, can reduce the cost of your policy premiums.
An independent insurance agent can also help find any small business insurance discounts you qualify for to reduce your premiums even further.
Case Examples: Solo vs. Mid-Size Businesses
Here are some sample small business insurance rates for 2025 by industry.
| Small Business Type | Average Cost of Small Business Insurance |
|---|---|
| Solo/consultant | Less than $100/month for basic coverage |
| Catering company | About $5,000/year for a full coverage policy |
| Three-person business | Between $885–$1,767/year, depending on amount of coverage |
Why Do Small Business Insurance Costs Vary So Much?
No two businesses are the same, which means each unique company's insurance needs are different. Insurance is highly personalized to tailor to your specific small business needs. While one company may require extensive cyber protection, another company may need more coverage for employees and company vehicles. The cost of each of these policies varies depending on the amount of coverage needed and other factors.
Further, a business's location can greatly impact its coverage costs due to the area's geographic risks, such as natural disasters. Policy customizations, such as adding riders to enhance your coverage, can also increase your premiums. Additionally, regulatory requirements and industry exposures for your unique business industry can impact the cost of your policy.
Get a Quote for Small Business Insurance with the Help of an Independent Insurance Agent
When you're ready to find quality, affordable coverage for your small business, no one's better equipped to help than a local independent insurance agent. These agents have access to multiple insurance companies, so they're free to shop and compare small business insurance quotes and policy options for you.
They'll get you matched to the policy that offers the best overall blend of coverage and cost. And down the road, your agent can help you file business insurance claims and update your coverage when necessary.
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