Americans value peace of mind. As a matter of fact, they value it so much so that they spend a staggering 1.3 trillion dollars on a medley of insurance services every year.

If you’re a business owner, chances are, you’re no stranger to how much the various policies you need to carry to keep running can set you back. If you’re just starting in business though, this may be a new, intimidating topic.

Will the business insurance costs your company face upon opening break the bank? Are you likely to weather your insurance costs easily?

In this post, we answer that question by sharing various factors and insurance averages that can help you paint a picture of what to expect.

Business Insurance Costs Vary Tremendously

While we wish we could save you time by quoting you exactly what you should expect to pay when you invest in business insurance, we can’t. The reason is that what you’ll pay for your insurance policy(s) will vary based on a variety of factors.

So, to better frame our conversation on cost potential, here are the key factors that will affect the rate you’ll get quoted.

Kinds of Insurance Needed

There’s no insurance policy called “business insurance” that’ll magically cover all your needs. The insurance your business will require will be a combination of policies.

These policies might include a general liability policy, property insurance, and worker’s compensation. You might even need additional policies that cover professional liability.

Your best bet to understanding exactly what kind of coverage you need would be to talk to your chamber of commerce or an attorney to understand your obligations. You can then talk to an insurance agent that’ll opine on the coverage you may want to opt into that goes beyond that scope.

Where You Live

It’s no secret that where you live affects how much you pay for things. Living in an expensive city like San Francisco, for example, will mean higher business insurance premiums than if you were operating a business in rural Montana.

If you’re finding that insurance quotes in your city are too high to make your company economically feasible to run, you’ll have to revisit your business plan or relocate your services.

Bundling Options

Bundling is a buzz word most insurers use to showcase how great the deals are they offer to their most rabid customers. Don’t let that marketing sheen turn you off though.

Most insurers will indeed offer better rates if you buy more services from them.

So, when you’re shopping for insurance, make sure you’re making it clear to a provider that you’re planning on buying multiple policies. Then, explicitly ask what the rate discount is for doing that.

Any insurer worth their salt should be able to make clear the savings they can pass onto you.

Your Industry

The higher risk your industry is, the more your insurance is going to cost.

For example, people that work in the restaurant business have teams of employees and are using expensive equipment that can be dangerous to operate. That’ll mean higher insurance quotes over those that are working in the cleaning industry and have maybe one employee.

Avoiding high rates associated with your business niche is unavoidable unless you’re open to switching ventures which isn’t the case for most entrepreneurs.

Staffing Numbers

The number of employees you have matters when you’re assessing business insurance costs. More employees mean more chances for people to get hurt. That’ll raise your worker’s compensation insurance costs and will likely adversely affect other policies as well.

Make sure you budget “per-employee insurance hike” costs into your salary offers so you don’t end up overextending yourself unexpectedly.

Desired Coverage Limits

If you’ve ever purchased car insurance, you know a thing or two about coverage limits. Coverage limits are how much your insurer will pay you in the event that you need to make a claim.

In theory, if you opt into lower coverage limits for your business, you’ll pay less on your policy per month. Of course, you’ll almost certainly have a legal obligation to achieve a base amount of coverage. Anything beyond that base though will be optional and by avoiding it, you’ll enjoy discounts.

Your Policy Provider

The quote you get from LoPriore Insurance Agency will be different than a quote you might get from a competitor. That goes to show you that no two agencies are going to charge you the same amount, even for the exact same coverage.

Keep that in mind and use that fact to drive your willingness to shop around. With a little extra legwork, you could easily save hundreds of dollars per year on what you pay for insurance.

Wrapping Things Up With a Few Averages

Stomaching the business insurance costs your area mandates is a necessity to operate. By understanding factors that’ll affect your quote, we’re confident you can shop more intelligently and hopefully, reduce your cost burden.

In case you are curious to know general business insurance averages, the cheapest flavor of insurance you’ll want on your portfolio is general liability coverage which will set the average company back about $65 per month. On the more expensive end of the spectrum is worker’s compensation which, on average, is over $100 per month.

Note that based on several factors, you can shave over 50% off that number.

Looking for more insurance for business advice? If you are, check out more of the newest content we have available on our website!