How Much Does Small Business Insurance Cost?
Starting one’s own business is a big step to take all on its own when one has no experience or safety net to fall back on if things were to go wrong. A business owner must be mindful of certain factors that combine to make a business successful or the least, safeguard it from any potential risks involved. One such essential factor is business insurance.
What is business insurance?
To explain briefly, business insurance is insurance coverage that protects business owners from any losses incurred due to unforeseeable circumstances that may cause damage to someone or an employee-related risk. It protects one from any potential liability claims that could arise and cause financial losses.
Cost of business insurance
The price of any insurance policy depends on the coverage a policyholder chooses and the premium they can afford to pay. A low-cost business insurance could be priced at as low as $42 based on the kind of coverage you go for. It must be noted that the cost of a business insurance policy also depends on numerous factors such as the industry you’re part of, location, the size of the business, etc.
For example, a sole proprietor of a clothing business working out of his/her home will have lesser risks involved and might end up paying $ xxx annually towards low cost business insurance but someone who owns a bigger business, has 100 employees, a factory and a warehouse might end up paying $ xxxx annually towards business insurance.
Factors That Influence The Cost Of Business Insurance
● Policy type- There are two standard types of liability policies that most businesses go for; general liability and professional liability. Both cover different kinds of liabilities and general liability is cheaper in comparison to professional liability. General liability covers someone else’s claim to bodily injuries or reputation damage by slander or libel whereas professional liability covers risks such as errors and omissions, malpractices in the provision of services by your business.
● Size of business – The size of one’s business determines the amount they pay for in business insurance annually. The bigger your business, the more risks involved in running it.
● Location – The location of where you set up your business affects business insurance too. Local laws, potential geographic risks, state laws and more influence the cost of insurance.
● Industry – If you are part of an industry that has a higher risk profile, you are more likely to pay higher towards insurance than someone with a low-risk profile business.
● Number of employees – In many instances, businesses with larger numbers of employees pay higher amounts for business insurance. The more you cover in workers compensation and the number of claims of professional liability directly affects how much you pay in premiums towards business insurance.
● Equipment Age & Type – If you own a business that involves the use of equipments that are either old or hard to repair or both, the insurance company will charge you more than they would charge a business with lesser equipment or easy to repair machinery.
While these factors determine the cost of business insurance, you must always take a quotation from more than two to three insurance companies to access and analyze which policy is the best for your business.