How much does small business insurance cost?

You’ve poured everything into your business, and you want to do everything you can to protect it. Commercial insurance coverage is a key piece of the protection puzzle. It protects against all kinds of risk, but how much does it actually cost?

Here, we’ll look at the key factors that influence the cost of business insurance, discuss core coverage and optional add-ons, and offer tips on how to save a few bucks.

At the end of the day, small business insurance is there to protect you from unexpected financial losses, so it's important to take the time to get the right coverage.

It all depends! There’s no one-size-fits-all answer when it comes to business insurance because every business is different.

Prices can range anywhere from $25 to $500 per month, but that number depends on your industry and a number of other factors we’ll explore later on. The amount you’ll pay also depends on the coverage you choose and the risks involved in your operations.

For example, construction companies typically face more risks than companies that produce handmade goods on a small scale. Understanding the factors that can influence your premium (your claims history, chosen deductible, etc.) will help you choose the right coverage at the right price. 

Insurance providers take a number of factors into consideration to calculate your premium. Here are a few: 

Small business insurance is like auto insurance in some ways. If you've made a lot of claims in the past, your insurer might identify you as a greater risk. As a result, your rates could be higher. If you have a clean record, on the other hand, your premiums could be lower.

Why? Because insurance companies look at your claims history to assess your risk. A track record of frequent claims can suggest a greater chance of future losses, so that risk will be reflected in your pricing. Worst-case scenario? You might not find an insurance company willing to cover your business.

As with any type of insurance policy, as you increase your coverage, you increase your costs. But when it comes to deductibles, the opposite is true. There's an inverse relationship between your deductible and your premium.

If you're comfortable assuming the risk of paying a higher deductible in the event of a claim, you might benefit from lower premiums. The important thing is to strike the right balance between protection and cost. You don't want your business to be exposed to risk unnecessarily, as it would be if you were to choose a coverage amount that’s too low. At the same time, your coverage amount affects your premium. So if you set your coverage amount too high, you might find it hard to keep up with your premium payments.

Remember: A higher deductible generally means a lower premium, and vice versa.

Some industries, such as construction, are riskier than others. Why? Because they tend to have higher rates of accidents, injuries and property damage.

Risk exposure in a field like accounting tends to be lower, though no business is completely risk-free. Accountants and lawyers, for example, face risks like errors and omissions or cyber incidents. Beauty salons may need more coverage for bodily injury or negligence. Once again, it all depends! 

The bigger your company, the more coverage you're likely to need, which has a direct impact on your premium. The more employees you have, the higher your risk of claims.

Similarly, the higher your annual revenue, the greater the potential financial losses you could suffer. This might increase your premiums for general liability insurance, property insurance and more.

Location has an impact on business insurance premiums, just like it does on home insurance premiums. If your business is in a high-crime area, for example, where there’s a greater risk of theft, you'll see this reflected in your premium. The same is true if your area is at high risk for natural disasters (forest fires, hailstorms, etc.).

And since insurance is provincially regulated, different provinces have different laws and regulations that insurers have to follow. This can have an impact on premiums as well. 

While it's important to have the right coverage, it's understandable to want to find savings where you can. Here are some ideas for ways you might be able to lower your business insurance premium. 

It's always a good idea to compare what’s available from different companies to get the coverage you need at the price you want, and insurers are making it easier and easier to do so. Many insurance companies offer online tools you can use to:

• Get an idea of how much your coverage could cost
• See available coverage options
• Tailor your policy to meet your needs

This will give you an idea of what types of coverage are available, how much they cost and what limits or exclusions may apply, so you can get the right coverage for your business.

And one last thing: Don't renew on autopilot. When renewal time comes around, you may want to consider starting the exercise all over again. Your needs may have changed in the interim, and different carriers may have become more competitive. 

As a small business owner, you'll want to have some money set aside for a rainy day. When it comes to your business insurance policy, it's worth considering whether you could use your rainy day fund to cover your deductible if you had to file a claim.

A higher deductible means lower premiums, which can lower your overhead. But you'll need to make sure that if something were to happen you'd be able to cover the costs. 

One of the best ways to get cheaper premiums is to minimize your claims, where possible. Businesses that have shown themselves to be low risk often enjoy lower premiums. One way to try to minimize claims is to proactively invest in risk management and safety training for your employees.

And while it might be tempting to make a claim for a relatively minor incident, it can be helpful to compare the repair costs to the cost of the deductible. And remember: If you make a claim, it will go on your record and could lead to higher premiums down the road.

As your business grows and evolves, it may make sense to drop unnecessary riders or add coverage you didn't previously need. Taking the time to review your policy once a year helps to make sure you're not overpaying and that your coverage remains aligned with your business needs.

If it's within your power to make improvements to the building or even perform regular maintenance with an eye to safety, it could help reduce your premiums. A safer building means a lower likelihood of incidents, accidents and injuries.

It’s also a good idea to take preventive steps to protect the building from water damage, which is a risk to any building. And if you have a security system installed, be sure to let your insurance provider know! 

Bundling the different types of business insurance you have is a great way to save time and money. Say, for example, you need commercial property, commercial auto and general liability insurance: If you buy all three from a single insurer, you may get a discount. And in the event that you have to make a claim, you’ll enjoy a simple, streamlined process.

Since so much of your business insurance premium boils down to the unique factors that define your business, it's important to obtain a personalized quote to get the most accurate estimate of how much your insurance rates might be. That said, here are a few examples of possible costs for different business types to give you a general idea.

For construction companies, insurance costs can range from $60 to $250 a month.* A number of different factors come into play when it comes to your premium calculation, and construction companies face specific risks, so it’s important to choose the right coverage.

Find out more about insurance for your construction business. 

Insurance costs for professional services (from legal, accounting and finance to janitorial and cleaning) and beauty care businesses (like barbershops and manicurists), range from around $25 to $50 a month.* These types of businesses face similar risks, so their costs tend to be similar as well.

Find out more about insurance for your professional services or beauty care business.

Costs for landlords who own or manage multi-unit residential properties and commercial properties tend to vary from $150 to $500 per month.*

Find out more about insurance for real estate owners and property managers. 

Condo corporation insurance generally costs in the range of $140 to $400 per month.* It’s different from the condo insurance held by individual unit owners. Condo corporation insurance covers the building structure, common areas and the corporation itself from various risks.

Find out more about insurance coverage for your condo corporation.

Business insurance isn’t one-size-fits-all, and neither are its costs. So much depends on your industry, where you're located, the size of your company, what coverage options you choose, and your overall risk. To lower your premium, consider bundling your insurance options or increasing your deductible.

But before you renew your business insurance, talk to us. We can help you choose the right protection at the right price for you. 

Ready to protect your business? Get your business insurance quote today.

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*Cost estimates provided for informational purposes only.