How much does small business insurance cost?
There's no single price: small business insurance costs depend on what your business does, its payroll and revenue, where it operates, its claims history and the limits you choose. We couldn't find a regulator that publishes average small business premiums. Broker data for very small businesses puts the median general liability policy around $45 a month and a business owner's policy around $83 a month, but your quote can be far higher or lower.
Published by Marcus L. Barber, former licensed Maryland property and casualty producer (2010–2012)Reviewed by Marcus L. Barber on Updated This guide is general education, not advice for your situation. We're an independent publisher, not an insurer or agent, and we may earn a commission from partner links. How we make money.
Key points
- Industry is one of the biggest drivers: insurers price workers' comp by job classification, and liability by how risky the work is.
- Workers' comp rates vary widely by state. In Oregon's 2024 comparison, New York's index rate was $1.98 per $100 of payroll and Virginia's was $0.73.
- Broker Insureon reports median monthly costs of $45 for general liability and $83 for a BOP among its customers, most of whom are very small.
- Bundling into a BOP, higher deductibles, safety programs and accurate payroll reporting can all bring the price down.
What drives the price
Wisconsin's insurance commissioner and the U.S. Small Business Administration (SBA) point to the same main factors:
- What your business does. A bookkeeper and a roofer face very different risks. Workers' comp is priced by job classification, which combines the payroll and losses of similar employers.
- Payroll and revenue. Workers' comp is charged per $100 of payroll; liability is often rated on sales or payroll.
- Location. The SBA notes business insurance rates vary significantly by location, and workers' comp rates differ a lot by state.
- Your building. For property coverage, the location, age and construction of the building, plus fire protection, matter.
- Claims history. Under workers' comp experience rating, employers with better than average losses get a credit, and worse ones pay more.
- Limits and deductibles. Higher limits cost more; higher deductibles cost less.
- Vehicles. Commercial auto premiums depend on how vehicles are used, how far they travel and their weight.
Workers' comp rates by state
The best neutral price comparison comes from Oregon's Department of Consumer and Business Services, which ranks every state's workers' comp rates every two years using the same mix of industries. In its 2024 study (rates in effect January 1, 2024), the median index rate was about $1.09 per $100 of payroll.
| State | Rank (1 = most expensive) | Index rate per $100 of payroll | % of study median |
|---|---|---|---|
| New York | 3 | $1.98 | 182% |
| California | 4 | $1.86 | 170% |
| Florida | 30 | $1.00 | 92% |
| North Carolina | 33 | $0.95 | 87% |
| Texas | 40 | $0.78 | 72% |
| Virginia | 44 | $0.73 | 67% |
These are index rates for comparing states, not quotes. Your rate depends on your job classes; an office job and a roofing job in the same state can differ many times over. See our workers' comp guide for who must carry it.
What broker data shows
Because we couldn't find regulator data on average small business premiums, the most-cited numbers come from brokers. Treat these as rough benchmarks, not neutral averages. Insureon reports these median costs among its customers, most of whom are very small (57% have one employee):
| Coverage | Median per month (Insureon customers) |
|---|---|
| General liability | $45 |
| Workers' compensation | $54 |
| Business owner's policy (BOP) | $83 |
| Commercial umbrella | $86 |
| Professional liability / E&O | $88 |
| Commercial property | $108 |
| Cyber liability | $129 |
Source: Insureon, updated February 2026. Larger businesses and higher-risk trades typically pay much more.
How to pay less
- Bundle into a BOP. The SBA says a business owner's policy can save money if you qualify.
- Raise your deductibles. You take the first few hundred dollars of each loss in exchange for a lower premium.
- Invest in loss control. Wisconsin's regulator says businesses with very good loss control and claims histories often pay less. Sprinklers, burglar alarms and security cameras may earn discounts.
- Classify and report payroll accurately. Your final workers' comp premium is set by audit. California's insurance department notes that underestimating payroll means a bill later; some insurers offer monthly payroll reporting.
- Buy the limits you need, including what your lease or client contracts require, and no more.
- Compare quotes from several licensed agents or insurers. The SBA recommends finding a reputable licensed agent and comparing prices.
Getting accurate quotes
Have this ready before you ask for quotes, so each insurer prices the same business:
- A plain description of what you do, and anything you don't do (for example, "residential painting, no roof work").
- Annual revenue and payroll, split by job type.
- Number of employees and any subcontractors.
- Your address, building details and the value of your equipment and inventory.
- Past claims for the last three to five years.
- Any insurance your lease, clients or licensing board require. See certificates of insurance.
Common questions
How much is general liability insurance for a small business?
It depends heavily on your industry, revenue, location and limits. Broker Insureon reports a median of about $45 a month ($538 a year) among its customers, who are mostly very small businesses. Higher-risk trades typically pay more.
Is a business owner's policy cheaper than buying coverage separately?
Often. The SBA says a BOP can save you money because it bundles property and liability coverage. Not every business qualifies, and prices vary a lot between insurers, so compare BOP quotes with separate policies.
How is workers' comp premium calculated?
Generally by multiplying the rate for each job classification by every $100 of payroll in that class, then adjusting for your claims history. The final premium is set by a payroll audit after the policy year.
Are business insurance premiums tax deductible?
Generally yes. The IRS treats insurance premiums for your trade or business as a deductible business expense, with some exceptions. Check with a tax professional for your situation.
How this guide was made
We drafted this guide with help from AI writing tools, working from the sources listed below. Every fact was checked against those sources, and Marcus L. Barber read and reviewed the full page, including its title, description and FAQs, before it was published. AI tools don't decide what we publish; a person does. Our editorial standards.
Sources
- Consumer's guide to insurance for small business owners (PI-085), Wisconsin Office of the Commissioner of Insurance
- Get business insurance, U.S. Small Business Administration
- 2024 Workers' compensation premium index rates, Oregon Department of Consumer and Business Services
- Workers' compensation premium rate ranking by state, Oregon Department of Consumer and Business Services
- Workers' compensation insurance guide, California Department of Insurance
- How much does small business insurance cost? (broker data), Insureon
- Instructions for Schedule C (Form 1040), Internal Revenue Service