How much does small business insurance cost?

Each insurance policy covers specific risks, and you'll pay more for insurance when your business is likely to encounter these risks. In general, businesses with more employees, larger offices, and more clients pay more for insurance coverage. Anything that makes claims more likely will increase the cost of coverage.

For example, general liability insurance covers the costs of accidents where customers sue over bodily injury or property damage. That's why businesses that are open to the public or handle customer property pay more for this policy. Simply put, the insurance company knows the odds of a claim are higher for these businesses, so it charges more to make up for it.

If you hire more employees you’ll pay more for workers’ compensation insurance, which covers work injuries.

Overall, business insurance costs more for companies with:

• A large rented or owned space
• Frequent public interaction
• More employees
• A history of claims, or an industry with a history of claims

Let's dig a little deeper into insurance costs for different policies.

Technology errors and omissions insurance (tech E&O) provides crucial liability coverage for tech businesses and independent contractors who provide professional services or advice. TechInsurance customers pay an average premium of $61 per month for tech E&O, or $735 annually.

Tech E&O includes both errors and omissions insurance (also called professional liability insurance) and cyber liability insurance. Because tech E&O covers lawsuits over the quality of your work and also cyber risks, your costs go up with your risk of these types of lawsuits.

For example, a project manager whose project is expected to increase company revenue may pay more for this policy. So might a cybersecurity professional responsible for another company’s data security.

General liability insurance is often required by clients, landlords, and lenders. It protects against common liability claims, like a client injury at your office. The average cost of general liability insurance is $42 per month, or $500 annually, for TechInsurance customers.

Your general liability risks and premium increase with the size of your business and its amount of public interaction. That’s why a computer repair store in a busy shopping district will pay more for this policy than an IT consultant who only sees a few clients.

The chart below shows average business insurance costs for TechInsurance customers. Our figures are sourced from the median cost of policies purchased by TechInsurance customers. The median eliminates high and low outliers, which means it provides a better idea of what you can expect to pay than the average.

Keep in mind that your business might not fit the typical profile of a TechInsurance customer:

• 80% have one or two employees
• 61% have an annual revenue of less than $200,000
• 64% have been in business for less than two years

See small business insurance costs for common policies:

• General liability insurance
• Errors and omissions insurance
• Workers' compensation insurance
• Business owner's policy
• Cyber liability insurance
• Commercial umbrella insurance
• Commercial auto insurance
• Employment practices liability insurance
• Directors and officers insurance
• Fidelity bonds
• Commercial property insurance
• Business interruption insurance
• Hired and non-owned auto insurance

Factors that affect insurance premiums include:

• Policy limits
• Deductible
• Business size
• Industry/profession risks
• Number of employees
• Business location

Other factors also play a role, such as which insurance company you choose. For example, two insurance companies may charge different rates for the same amount of general liability coverage.

The policy liability limits and deductible you choose will affect the premium you pay. Higher limits cost more and provide greater coverage. A higher deductible could reduce your premium but cost more in the long run.

Most businesses and contractors (63%) choose errors and omissions policies with a:

• $1 million per-occurrence limit: the policy pays up to $1 million on any single claim.
• $1 million aggregate limit: the policy pays up to $1 million on all claims.

The cost of small business liability insurance also depends on the specifics of the policy. For example, an errors and omissions policy that includes cyber liability insurance will cost more since it includes coverage for data breaches.

Your line of work and its risks affect your premium. For example, computer repair technicians may pay more for general liability insurance because they handle other people's property and could be blamed if something breaks. IT consultants might pay more for errors and omissions insurance because they're vulnerable to client lawsuits over the quality of their advice.

The size of your company also affects your level of risk and premium. Companies with more employees can expect to pay more for coverage. Find out more about business insurance costs for independent contractors and consulting businesses.

Reduce your risks. Tech companies with no previous claims on their insurance can expect to pay less for business insurance. You can avoid claims with a risk management plan for workplace safety and cybersecurity threats. That could include:

• Employee safety training
• Elimination of clutter and other hazards
• Strict protocols for handling customer data
• Use of firewalls and other security technology

Pay your annual premium in full. When you purchase a policy, you can pay your premium in monthly or annual installments. Paying annually often costs less than making monthly payments.

Bundle policies. Bundling policies can lower your premium. Small, low-risk technology businesses may be eligible for a business owner’s policy. A BOP bundles general liability insurance with commercial property insurance at a lower cost than purchasing the policies separately.

Buy only the coverage you need. Small tech companies don't necessarily need the same protection as larger companies. When purchasing a policy, choose coverage limits and a deductible that are appropriate for your level of risk.

It’s easy to get coverage for your small tech company with TechInsurance. Instead of contacting multiple insurance companies, you simply fill out one easy online application to get quotes from top-rated insurance providers.

If you’re not sure which policies to buy or how much coverage you need, chat with an insurance agent to find out. We’ll help you find the right small business insurance for your company.