Small business insurance costs average $30–$150 per month for basic coverage, depending on your industry, revenue, location, and risk factors. Understanding these prices helps you budget effectively and avoid overpaying for unnecessary coverage.
This guide breaks down real 2026 pricing, factors that influence premiums, cost examples by business type, and proven strategies to lower your rates. Whether you’re a freelancer or small agency owner, you’ll find transparent data to make informed decisions.
What Determines Small Business Insurance Cost?
Insurance premiums are calculated based on your business’s specific risk profile. Insurers use data to predict how likely you are to file claims.
Key pricing factors:
- Industry risk: Construction and healthcare pay more than consulting due to higher claim likelihood
- Annual revenue: Higher revenue often means higher limits and premiums
- Location: States like California and New York have higher rates due to litigation trends
- Number of employees: More employees = higher workers’ compensation costs
- Claims history: Previous claims increase future premiums
- Coverage limits: Higher limits cost more (e.g., $1M vs $2M liability)
- Deductible amount: Higher deductible lowers premium
Average Costs by Coverage Type
Here are realistic 2026 monthly premiums for standard coverage limits:
| Coverage Type | Coverage Limit | Average Monthly Cost |
|---|---|---|
| General Liability | $1 million | $30–$80 |
| Professional Liability | $1 million | $50–$150 |
| Business Owner’s Policy (BOP) | $1M liability + $500K property | $50–$120 |
| Workers’ Compensation | State minimum | $50–$200+ |
| Cyber Liability | $1 million | $25–$100 |
| Commercial Property | $500K building | $40–$100 |
Costs by Business Type
Premiums vary significantly by industry. Here’s what small businesses typically pay:
| Business Type | Employees | Monthly Insurance Cost | Main Coverages |
|---|---|---|---|
| Freelance Designer | 1 | $25–$50 | General + Professional Liability |
| IT Consultant | 1–2 | $40–$90 | Professional + Cyber |
| Marketing Agency | 5–10 | $100–$300 | BOP + Workers’ Comp |
| Retail Store | 3–8 | $80–$200 | BOP + Product Liability |
| Contractor/Home Services | 5–15 | $150–$450 | General + Workers’ Comp |
| Restaurant/Cafe | 5–12 | $120–$350 | BOP + Liquor Liability |
| E-commerce Store | 2–6 | $60–$150 | General + Product + Cyber |
Real-World Cost Examples
Freelancer Examples
Graphic Designer (solo, $60K revenue):
- General liability ($1M): $25/month
- Professional liability ($1M): $30/month
- Total: $55/month ($660/year)
Freelance Writer (solo, $80K revenue):
- Professional liability only: $35/month
- Total: $35/month ($420/year)
Small Business Examples
Marketing Agency (8 employees, $400K revenue):
- BOP ($1M/$500K): $90/month
- Professional liability: $80/month
- Workers’ comp: $120/month
- Total: $290/month ($3,480/year)
E-commerce Store (5 employees, $300K revenue):
- BOP: $70/month
- Product liability: $45/month
- Cyber liability: $35/month
- Total: $150/month ($1,800/year)
Handyman Service (10 employees, $500K revenue):
- General liability ($2M): $180/month
- Workers’ comp: $250/month
- Commercial auto: $120/month
- Total: $550/month ($6,600/year)
Monthly vs Annual Payment Savings
Most insurers offer discounts for annual payments:
| Payment Method | Typical Premium | Discount |
|---|---|---|
| Monthly | $50/month | 0% |
| Quarterly | $145/quarter | 3–5% |
| Annual | $550/year | 8–12% |
Example: $60/month coverage costs $720/year monthly, but only $630/year if paid annually (12% savings).
State-by-State Cost Differences
Location significantly impacts pricing due to legal climates and claim frequency:
| State | Average General Liability | Notes |
|---|---|---|
| California | $65/month | High litigation |
| New York | $70/month | High costs |
| Texas | $45/month | Moderate |
| Florida | $60/month | Hurricane risk |
| Massachusetts | $50/month | Average |
| Arizona | $40/month | Lower risk |
Cost Comparison: Top Providers
Average monthly rates for $1M general liability coverage (solo business):
| Provider | Monthly Premium | Quote Time | Best For |
|---|---|---|---|
| Next Insurance | $35 | Instant | Fast online quotes |
| Hiscox | $42 | 10 minutes | Professional services |
| Simply Business | $38 | 5 minutes | Freelancers |
| State Farm | $48 | 1–2 days | Traditional service |
| Progressive | $45 | 15 minutes | Contractors |
Hidden Costs to Watch For
Common add-ons that increase premiums:
- Umbrella policy (+$20–$50/month for extra $1M coverage)
- Higher limits ($2M vs $1M: +30–50%)
- Equipment breakdown (+$15–$30/month)
- Business interruption (+$10–$25/month)
Deductible impact:
| Deductible | Monthly Premium Savings |
|---|---|
| $500 | Baseline |
| $1,000 | -15% |
| $2,500 | -25% |
| $5,000 | -35% |
How to Get Cheap Small Business Insurance
7 proven strategies to lower premiums:
- Bundle policies – BOP saves 15–30% vs separate policies
- Shop annually – Compare 3–5 providers each year
- Raise deductibles – $2,500 deductible can save 20–25%
- Pay annually – 8–12% discount
- Join associations – Industry groups offer group rates
- Improve safety – Document training and procedures
- Maintain good credit – Used by most insurers for pricing
- Claims-free discount – 5–15% after 3+ years without claims
Quick wins: Bundle + annual payment + $1,000 deductible = 25–35% savings.
When Insurance Costs Too Much
Signs you may be overpaying:
- Quotes vary by more than 30% between providers
- Same coverage costs 50%+ more than industry averages
- Agent won’t shop multiple carriers
- No bundling options offered
Action steps:
- Get fresh quotes every 12 months
- Ask about all available discounts
- Consider online insurers for better rates
- Review coverage annually to avoid gaps or over-insurance
Frequently Asked Questions
How much is general liability insurance for a small business?
$30–$80 per month for $1 million coverage. Freelancers pay toward the lower end; contractors pay more due to higher risk.
What is the cheapest small business insurance?
General liability for solo professionals (designers, consultants) at $25–$40/month. Bundled BOP policies are usually the best value for businesses with property.
Does insurance cost more with employees?
Yes. Workers’ compensation adds $50–$200+/month depending on payroll and industry risk.
Can I pay small business insurance weekly?
Most insurers require monthly minimums. Some offer weekly for workers’ comp, but monthly/annual payments offer better rates.
How much does location affect insurance costs?
20–50%. High-litigation states (CA, NY, FL) cost more than low-risk states (TX, AZ).
Is business insurance tax deductible?
Yes. Premiums are typically 100% deductible as ordinary business expenses.
Protecting your business doesn’t have to break the bank. Start by getting quotes from multiple providers, bundling coverage, and choosing appropriate deductibles.
Related guides:
- [Small Business Insurance: Complete Guide (2026)]
- [Types of Small Business Insurance Explained]
- [General Liability Insurance for Small Businesses]
Ready to compare rates? Most providers offer free instant quotes online.