How to Get Cheap Small Business Insurance

how to get cheap small business insurance

Seen as an added cost rather than a long-term investment, most entrepreneurs ditch insurance thinking that it is not an integral part of their business. But, regardless of the industry you work in obtaining the right insurance protects your business from unforeseen events and unwanted liabilities.

You might be thinking that getting commercial insurance is complicated or expensive, but it doesn’t have to be. There are several factors that contribute to the price of your premiums but depending on your insurance agent and provider, some businesses could get basic policies under $100.

However, it’s important to keep in mind that the cheapest policy doesn’t always equal the best policy. It should be a balance of price and making sure you have adequate coverage to protect your business.

Prices are determined on an individual basis, there are no pricing rules applicable to all businesses. But there are certain things you can do to lower your insurance cost without sacrificing the safety of your company. Here are several ways you can get cheap small business insurance.

insurance cost drivers

Top Factors that Impact the Cost of Small Business Insurance

  1. Type of policy. General liability tends to cost the least while employment practices liability insurance has the highest cost.
  2. How big your business is. The physical structure and how big the lot is affects both general liability and property insurance costs, for instance.
  3. Your industry. Your risk profile depends on what type of business you have. If you are in a higher-risk category like construction, you could pay more than someone in accounting for certain types of coverage.
  4. Location. Where you set up shop has repercussions that affect the value of our property, the state, and local laws that regulate business in the area, and geographical risks, like flooding. In addition, do you offer services at other people’s locations? This can affect your costs.
  5. How much you make each year. The more you make, the more likely the amount of a settlement can be higher if you are sued. Basically, the more your company is worth, the more you could potentially lose.
  6. The types of contracts you have. Errors and Omissions insurance, or E&O, is directly tied to your work history and the types of contracts you sign. The cost of E&O is affected by your previous contracts and the type of work you have done in the past.
  7. How many employees you have. Workers’ compensation insurance is directly related to the number of people covered. It also affects E&O and general liability.
  8. How many claims you have made. Just like homeowners and drivers, business owners pay more if they have filed numerous claims.
how business insurance costs are calculated

How business insurance costs are calculated

When it comes to insurance premiums, they are determined following a specific formula that applies to your business. Depending on the type of policy and risks involved, rates are then calculated to establish prices. Each risk your business faces has an associated cost and insurance companies review this based on historical trends and analytic models.

As a small business owner, it’s important to know the risk factors that affect insurance costs to have a better understanding of what you’re paying. Some risks carriers take into consideration include:

  • The classification of your business (corporation, sole proprietorship, LLC, etc.)
  • The goods and services you deliver
  • Number of employees
  • The properties your business owns like buildings, vehicles, equipment, supplies, and their value.
  • The location of your business
  • Your expenses and earnings
compare insurance quotes

Comparing business insurance quotes

It’s important to find an affordable policy that will suit your budget together with the needs of your business. Make sure to compare quotes from different agents and companies to land a better offer.

You should only consider insurance quotes from knowledgeable agents and reliable providers. The last thing you want from any insurance plan are loopholes within your package, inadequate coverage, limited protection, and difficulty filing claims due to complicated procedures.

When comparing business insurance quotes, it’s best to get three to five assessments from various providers. Moreover, don’t settle with verbal discussions but have everything in writing. Ask for a written quotation including the coverage details, limitations, and final cost for easy comparison. Remember that beyond pricing plans, you need to examine closely the value and benefits you’ll get out of the policy.

Bundled policies

The next trick on how to get cheap small business insurance is to take advantage of bundled plans. Just like discounts offered in department stores, insurance companies run their own promotions to attract potential clients. Instead of buying one policy from different providers, integrating multiple insurance plans from a single carrier enables you to get lowered rates and higher discounts.

A Business Owner Policy (BOP) for example, is one of the most common bundles for small business owners. A BOP combines Commercial Property and General Liability insurance in one convenient policy.

When combining multiple insurances in one single package, double check your policies and make sure that everything works together. If you think that there are coverage gaps within each policy, ask for commercial umbrella insurance to add an extra layer of financial security.

Understanding business insurance coverage

There’s more to learn about small business insurance than pricing and packages. Beyond anything else, you need to know what’s included within your policy. Each company, big or small, has its own unique needs and industry-specific risks. You cannot compare the insurance of barbershops to restaurant businesses.

Although some policies are generally required by most states, such as Workers Compensation, your insurance coverage differs depending on the business and number of employees you have.

If you want to protect business properties like your building and equipment against unforeseen events, you’ll need Business Property insurance. If your business uses commercial vehicles, a Commercial Auto policy will cover the liabilities. And if your company deals with giving professional advice, having Professional Liability insurance will save you from costly defense expenses as well as legal settlements.

Regardless of insurance type, always remember that your policy should provide dependable liability coverage. It should be easily accessible, detailed, consistent, and reliable in times of concern.

manage risks

Managing risks to reduce claims and lower premiums

The last tip on how to get cheap small business insurance is to manage risks to reduce claims and lower premiums. The greater the risks you have in your business, the higher the chances of paying pricey premiums. For example, if your business deals with using power tools and big machinery, your worker’s compensation might cost more than those running a clothing retail shop.

There are several ways to manage risks to obtain cheaper Business Liability insurance. First, make sure you’re operating a safe work environment. This means making sure all employees know how to operate machinery or hazardous materials to reduce the chances of an accident.

You could also set up a safety management system and a business continuity plan in case of major incidents.

In addition:

  • Improve security measures on both physical and virtual properties
  • Establish crisis management in the event of natural calamities
  • Annually check all tools and equipment to ensure they’re working properly

Final Thoughts

Small business owners have a lot on their plates. The last thing you need to worry about is getting commercial insurance. The more you know about what influences the cost of your insurance premiums, the more you can make changes that will reduce the risk and lower the cost. Costs vary from region to region and from industry to industry. If a company in the same industry is paying more or less, there can be complex reasons. Understand that insurance isn’t a flat rate, one-size-fits-all system. It is essential that you develop a positive working relationship with your small business insurance agent, with clear communication. Let him know about changes in your business that can affect coverage.

CoverWallet has taken a traditionally long and complicated process and made it easy to compare quotes, get coverage, and generate certificates of insurance all online.


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The content provided on this page is intended for general information purposes only and is not represented to be error-free nor is it intended to constitute an offer, inducement, promise or contract of any kind for you to rely upon. The information and data linked to by CoverWallet are provided as a courtesy and are not intended to nor do they constitute an endorsement by CoverWallet of the linked materials. To get accurate information for your business and industry we recommend you contact a licensed insurance agent or attorney.

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