Business Insurance Costs for Small Businesses: What You Actually Pay (2026)

A freelance designer, a five-person plumbing company, and a 20-seat restaurant all search the same phrase, "business insurance cost," and the honest answer differs by a factor of ten or more across the three. That spread is not carrier mischief; it is the pricing engine working as designed, rating each business on what it does, who it employs, and what it owns. The useful starting point is the published medians: Insureon, which aggregates quote and policy data across thousands of small businesses, puts general liability near $42 per month, workers compensation near $45, professional liability near $61, and a bundled business owners policy near $57. This guide walks through each coverage, what moves the number up or down, and where bundling genuinely saves money, so the quotes you receive read as math instead of mystery.

The Numbers at a Glance

Medians hide the tails by definition. A low-risk consultant can sit well under every figure above, while a roofing contractor or a bar will sit well over several of them, and both are being rated correctly. Use the table to spot a quote that is wildly out of band, not to predict your own premium to the dollar.

General Liability: The Policy Everyone Asks You For

General liability is the foundation layer, covering third-party bodily injury, property damage, and advertising injury claims, the customer who slips in your shop, the client laptop your technician knocks off a desk. It is also the policy other parties demand to see: landlords require it in leases, general contractors require it from subs, and enterprise clients require certificates before signing. The standard small business configuration is $1 million per occurrence and $2 million aggregate, and at a median near $500 per year it is the cheapest contractual unlock in business. Premiums scale with foot traffic, physical work at client sites, and revenue, which is why a retail store or contractor pays multiples of what a home-office consultant pays for identical limits.

Workers Compensation: Priced Per $100 of Payroll

Workers comp is the most formulaic line on the schedule. Nearly every state requires it once you have employees, and the premium multiplies three numbers: your payroll in hundreds of dollars, a class-code rate reflecting the injury risk of each job, and an experience modifier reflecting your claims history. Class-code rates, maintained by NCCI in most states, span an enormous range: clerical office staff rate at well under a dollar per $100 of payroll, while high-risk trades like roofing rate into the double digits. That structure produces the two practical takeaways. First, growth raises the premium automatically, because payroll is the exposure base. Second, classification accuracy is worth real money: an office manager misclassified under a field-labor code is the most common overcharge an audit finds, and a clean claims record compounds into a discount through the experience modifier year after year.

Professional Liability and E&O: Coverage for Being Wrong

General liability covers what your business physically does; professional liability, often called errors and omissions, covers what it advises, designs, calculates, and certifies. A consultant whose recommendation loses a client money, an accountant who misses a filing deadline, an IT firm whose configuration error takes a customer offline, these are E&O claims, and a general liability policy pays none of them. Insureon puts the median near $61 per month, with pricing driven by revenue, contract sizes, and the litigation profile of the profession. For service businesses, the sober logic is that the policy costs less per year than the deductible on most lawsuits, and a growing share of client contracts now require proof of E&O before work begins.

Cyber Insurance: The Fastest-Moving Premium

Cyber is the youngest line and the one with the steepest median, roughly $145 per month in Insureon data, because the loss environment keeps shifting underneath it. Verizon Data Breach Investigations Report research has consistently shown that small businesses are a primary target rather than an afterthought, and the costs a policy absorbs, forensic response, customer notification, ransomware negotiation, business interruption, and liability for exposed data, arrive in lumps no small business budget anticipates. Pricing turns less on revenue than on practices: carriers increasingly quote based on whether you run multi-factor authentication, maintain offline backups, and train staff against phishing. Hardening those controls is the rare move that lowers both your risk and your premium simultaneously.

The BOP: Where Bundling Genuinely Wins

A business owners policy packages general liability, commercial property, and business interruption coverage into one contract priced as one risk, and the economics favor the bundle: the Insureon median of about $57 per month sits only modestly above standalone liability while adding coverage for your equipment, inventory, and the income you lose if a covered event closes your doors. Business interruption is the quietly valuable piece. FEMA and Small Business Administration disaster-recovery messaging has long emphasized how few small businesses survive an extended closure, and interruption coverage is the line that pays the rent and payroll while you rebuild. If your business owns anything it cannot work without, premises, gear, stock, the BOP rather than bare liability is almost always the right comparison to quote.

Beyond the Core Five

Three more lines show up as a business matures. Commercial auto becomes mandatory the moment vehicles do business work, because personal auto policies routinely exclude business use, a gap many owners discover only at claim time. A commercial umbrella stacks an extra layer of liability, commonly $1 million or more, above the underlying policies for a comparatively modest premium, and it is frequently the cheapest way to satisfy a large client contract that demands higher limits than your base policy carries. Employment practices liability, covering claims like wrongful termination and discrimination, enters the conversation with the first few hires. None of the three belongs in every starter package, but all three belong on the annual review agenda, because each covers a category of loss the core policies deliberately exclude.

What Actually Drives Your Premium

Six variables explain most of the business insurance cost variation between two companies: industry risk class, the dominant factor, because carriers price decades of claims data by trade; payroll and revenue, the exposure bases that scale workers comp and liability; location, which carries state rate filings, local litigation climates, and catastrophe exposure; limits and deductibles, the levers you control most directly; claims history, which follows the business through the experience modifier and underwriting files; and years in business, since a track record reads as underwriting evidence that you manage risk. Notice what is missing: shopping effort. Identical risks routinely receive quotes hundreds of dollars apart, which is the argument for comparing carriers through an independent agent at least every few renewals.

Right-Sizing Coverage Without Overpaying

The failure mode that the data flags is not overpaying but underinsuring: Hiscox research on small business coverage has found roughly three-quarters of US small businesses underinsured for at least one exposure they actually carry. The fix is an inventory, not a bigger budget, because business insurance costs are easiest to manage when every policy maps to a named exposure. Start by mapping what you have against what a business like yours typically carries with a business insurance benchmark, which compares coverage types and limits by industry, revenue, and headcount. A coverage gap assessment then turns the inventory into a ranked exposure list, and an annual pass through an insurance policy grader catches the quiet drift, limits that no longer match revenue, exclusions nobody read, deductibles set for a smaller company than you now run. Owners earlier in the journey who are still asking which coverages apply at all can start with the broader what insurance do you need quiz before pricing anything.

For the brokers and agencies serving this market, those same assessments are the commercial lines pipeline: an owner who has just seen their own coverage gaps named is the warmest possible first call. That playbook lives in our guide to lead generation tools for insurance brokers.

The bottom line on business insurance cost: for a typical low-to-moderate-risk small business, a sensible package, a BOP, workers comp once you hire, and E&O if you sell expertise, lands in the range of $150 to $300 per month at published medians, before industry risk pushes it up or a clean office profile pulls it down. Price it against the alternative it replaces: a single uncovered liability claim, injury, or extended closure, any of which costs more than a decade of premiums.