As a business owner, one of the essential investments you need to make is purchasing business insurance. Business insurance provides financial protection for your company against unexpected events, such as property damage, lawsuits, and employee injuries. However, one of the most significant factors to consider before purchasing business insurance is the average cost.
In this article, we will discuss the average business insurance cost and the factors that influence it.
Understanding the Average Business Insurance Cost
The average business insurance cost varies depending on several factors, including:
- The industry
- The size of the company
- The type of coverage needed
According to a survey conducted by Insureon, the average cost of small business insurance is on average $1,281 per year. However, this figure may be higher or lower depending on the unique needs of your business.
Factors that Influence the Average Business Insurance Cost
The industry you operate in plays a significant role in determining your business insurance cost. High-risk industries, such as construction, healthcare, and transportation, typically pay more for insurance than low-risk industries. This is because the likelihood of accidents and injuries is higher in high-risk industries.
2. Size of the Company
The size of your company also influences the average business insurance cost. Smaller businesses with fewer employees and lower revenue on average pay less for insurance than larger companies. This is because smaller businesses typically have fewer assets to protect and lower risks.
3. Type of Coverage Needed
The type of coverage you need is also a crucial factor in determining your average business insurance cost. General liability insurance, which covers property damage, bodily injury, and advertising injury claims, is the most common type of coverage needed by small businesses. Other types of coverage, such as:
- Professional liability insurance
- Workers’ compensation insurance
- Cyber liability insurance
May also be necessary depending on your industry and business needs.
How to Lower Your Average Business Insurance Cost
While business insurance is a necessary investment, there are ways to lower your average insurance cost without compromising coverage. Here are some tips to help you reduce your business insurance cost:
1. Shop Around
Just like any other insurance policy, it’s essential to shop around and compare quotes from different insurance providers. This allows you to get the best coverage at a reasonable cost.
2. Increase Your Deductible
Increasing your deductible can help you lower your average insurance premium. A deductible is an amount your business pays out of pocket before your insurance coverage kicks in. By raising your deductible, you can lower your premium.
3. Bundle Your Coverage
Some insurance providers offer cost discounts when you bundle multiple types of coverage for your business, such as general liability and professional liability insurance.
4. Work with an Insurance Broker
An insurance broker can help you find the best insurance coverage for your business at an average cost. They have access to multiple insurance providers and can help you compare quotes and coverage options.
Strategies to Minimize Business Insurance Costs and Optimize Coverage
While insurance is a necessary investment, it’s essential to shop around, increase your deductible, bundling your coverage, and work with an insurance broker to lower your average insurance cost. By taking these steps, you can get the best insurance coverage for your business at an affordable cost.