Finding cheap small business insurance is possible if you take a systematic approach. Determine what suits your company’s risk needs, get an idea of realistic pricing, then find out who the top carriers are in your area. Learn what exclusions there are with inexpensive business insurance so that you aren’t left with an uncovered claim.
There are many companies offering competitive business insurance rate, but CoverWallet has found the sweet spot by partnering with great carriers for excellent policies at the best possible rates. Visit its online platform to see how easy it is to get cheap, quality business insurance.
Here are the six steps to find cheap small business insurance.
1. Understand How Cheap Business Insurance Works
As a small business owner, being pennywise is important. However, don’t skimp on necessary coverage for small business insurance to save a few dollars a month. Cheap insurance with inferior carriers that don’t have solid credit ratings could lead to denied claims, leaving you on the hook for damages and injuries.
If something is excluded from the policy, business owners may be paying for insurance that doesn’t adequately cover their risk. The most common time a small business owner realizes he got the wrong business insurance is when he is in the middle of a claim that gets denied and a lawsuit follows. Legal costs are often far more than claims’ values. This often leads to insolvency.
Cheap Business Insurance vs Affordable Business Insurance
Cheap insurance isn’t always the same as affordable insurance. By only shopping on price, you risk ignoring the necessary coverage options your business needs. Nothing is more expensive or frustrating than an uncovered claim. Affordable insurance protects your risk without breaking the bank.
The difference between cheap and affordable could be:
- Coverage limits: Double liability coverage rarely doubles the cost of insurance; in fact, it is often only a few dollars a month more in premium
- Location of claims: Are your tools, equipment, or people only covered in the office or are they covered when out in the field
- Exclusions: Are you covered for acts of terrorism, cyber exposure, pollution, or punitive damages
Realizing you have an excluded loss is not just infuriating. If a hacker took control of your database resulting in a HIPAA violation, the penalties could be as high as $50,000 per incident. Uncovered losses often bankrupt a business. Affordable business insurance might cost a few extra dollars but is worth it in the long run.
2. Determine Your Business Insurance Needs
Look at your business to determine what the most common risks are. Most businesses must cover incidents where people accidentally get hurt at the business, property is accidentally damaged, or there are other claims like slander, all of which make general liability insurance a key coverage. Other policies cover employers when employees get hurt at work, paying medical, and payroll costs.
Types of Cheap Small Business Insurance
|Insurance Type||What It Does|
|Commercial General Liability||Slip-and-fall coverage for customers or bystanders hurt through business incidents|
|Workers' Compensation||Employee coverage for medical expenses and wage loss after a work injury|
|Commercial Auto||Business vehicle coverage for property and injury in motor vehicle accidents|
|Business Property||Replaces or pays for company property used in course of business, such as tools or furniture|
|Errors & Omissions||Defends company against claims of unprofessional work resulting in losses|
|Umbrella Insurance||Extends liability coverage limits for general, auto and workers' comp policies|
|Business Interruption||Pays partial company revenues during closures resulting from covered claims|
The best way to keep costs down and find cheap business insurance is to bundle or combine policies. Many strong carriers offer what is called a business owners policy (BOP) that includes general liability, business property, and business interruption coverage.
Making sure you shop for quotes and compare policies apples-to-apples is important when looking for cheap business insurance. CoverWallet is an ideal place to start. Using a quick online application, you can get a free no-obligation quote or even connect with a live insurance expert.
Decide How Much General Liability Insurance Is Needed
The most common general liability coverage amounts for small business owners is $300,000, $500,000, or $1 million, and the options go up to $5 million. The coverage is often listed as $300,000/$600,000. The $300,000 is per incident with $600,000 being the aggregate if there is more than one incident. Lower coverage amounts typically result in lower general liability insurance costs.
Determine the Amount of Business Property Insurance
A business with a lot of equipment, computers, tools, or inventory needs to protect the ability to do business as soon as possible after a loss. Business property insurance covers loss to theft, fire, vandalism, explosions, and burst pipes. Tally what everything is worth and what it would take to replace it to get back to business.
Establish Other Business Risks to Cover
Other risks include professional liability and umbrella insurance cover extended liabilities. Professional liability protects if the business is accused of not properly fulfilling job duties based on professional standards. An umbrella policy increases the liability limits for a very low price on all liability coverage you have.
3. Estimate Small Business Insurance Pricing
Business insurance prices add up quickly. Even with general BOP covering both general liability and moderate amounts of business property can cost $400 to $600 annually depending on the industry. Add in workers’ comp, professional liability, and commercial auto and business owners are suddenly spending thousands on business insurance.
Cost of Cheap Small Business Insurance by Industry
|Errors & Omissions|
Note: Table reflects average premium estimates.
Actual industry classification, state, and carrier can alter the average costs of specific policies. Not every type of business requires every insurance type. Focus on your industry to get insurance at the right price for the proper coverage. Pricing is highly contingent on state laws and regulations.
4. Research the Best Small Business Insurance Companies
The best companies for cheap general liability are financially solvent and have a good reputation for claims management. Insurance carriers rate every business for predictable exposure. They consider the type of work, location, company history, and size. In searching for inexpensive business insurance consider company history and claims paying reputation.
Some criteria to use in considering a carrier for inexpensive or cheap small business insurance include:
- Financial strength: The company has financial assets to cover major claims made every year
- Experience in industry: Carriers experienced in your business understand the types of claims that are made in your industry
- Claims processing: Makes things simple when experiencing a loss so businesses can get back to work quickly and to full capacity
- Policy exclusions: Every commercial insurance policy has exclusions; exclusions are more extensive with some carriers
- Added fees: Cheap is great until you start adding up brokers fees, certificate fees, or policy change fees
There is one cost to do business and another cost to do business properly. Think about your own small business and what happens if corners are cut. More than likely, quality or service drops one way or another.
Top Insurance Carriers to Find Affordable Business Insurance
|Commercial Insurance Provider||This Provider is Best at ...|
|CoverWallet||Low-cost policies for businesses needing quick coverage|
|Hiscox||Helping independent contractors who don’t lease office or retail space|
|Insurance321||Shopping policies among top carriers saving owners time|
|AP Intego||Pricing strategies for businesses with small office teams|
|State Farm||Maintaining a hands-on approach in risk and claim management|
|Progressive Commercial||Protecting commercial vehicles and bundling policies to reduce costs|
|Farmers Insurance||Explaining coverage and options to business owners to make informed decisions|
|Nationwide||Building policies that make sense for small business owners without extras|
|CoverHound||Businesses wanting to shop multiple quotes from top carriers|
Due Diligence on Cheap Business Insurance Providers
Insurance carriers are rated for financial solvency and claims-paying ability through one of four rating companies. These are Moody’s, A.M. Best, Standard and Poor’s, and FitchRatings. Look for companies with A ratings or higher and those that have no derogatory history for failing to pay claims.
Check online or talk to other small business owners who have had claims with the company. Make sure the company is responsive in the claims process and works hard to get your business back up and running sooner than later. Being stalled in the claims process can lead to a complete business shut down.
5. Learn About Cheap Business Insurance Exclusions
Exclusions in an inexpensive business insurance policy may include ordinance law, pollution, cyber exposures, and customer’s personal property. While every insurance policy has some type of exclusion listed in the contract, understanding what your policy doesn’t cover is as important as understanding what it does.
Buying cheap insurance increases the risk of more exclusions. This doesn’t mean that the company is bad but is instead offering a product for reduced pricing to meet small business needs. It’s just pricing a product it knows it can remain profitable with.
There are three steps to address exclusions in your cheap business insurance.
1. What Are the Insurance Policy Exclusions
Since no one insurance policy covers a small business owner for all types of losses, ask the carrier what gaps still exist for your business. Even with a combination of policies, cheap insurance might not cover cybersecurity risks, flooding losses, or acts of terrorism. Even if you don’t opt for more coverage, learn what isn’t covered.
A claim not covered is the worst case scenario for any business owner. Many of these situations are because the policy coverage and exclusions were not explained properly. A business flooding out because of a pipe burst is a covered claim while flooding like that from Hurricane Katrina is not. Ask for specific scenarios to get an understanding of covered losses.
2. Adding Coverage if Needed
Ask what it takes to add coverage for anything that might be concerning to you. These costs might be worthwhile. For example, if cybersecurity isn’t covered, you might be able to add it on with a rider or an additional policy. Review the cost and coverage to determine if it is worth it for you.
Don’t buy into the overwhelming doom and gloom many insurance agents claim. If you have done your homework on the common risks for your industry and business, you probably don’t need every policy with the highest limits for each. Pay for the right insurance coverage and not more.
3. Prepare the Business for Noncovered Claims
Just because you opt out of purchasing a specific coverage doesn’t mean you can’t protect against it. For example, a retail company might opt out of purchasing cybersecurity coverage. However, it can still mitigate potential financial loss with increased firewall protection, employee security training, and best practices for passwords.
Similarly, consider deductibles as a valuable way to adjust premium costs. Clients worry about increasing deductibles because they don’t want to pay the out of pocket costs. Consider decreasing your annual premium by $300 to increase a deductible from $500 to $1,000. Within two years, you have saved $600. Put this money aside for your deductible if you need it then continue savings year after year.
Insurance covers the costs of claims and losses; it doesn’t prevent them. A small business can do a lot of prevent claims costs and reduce the cost of insurance by having set policies and procedures in place for customer interactions, equipment use, and employee safety. Save money by not having a claim in the first place.
6. Choose the Best Cheap Business Insurance Policy
While keeping money in mind, look at all the policy options. Consider how to get the best coverage within the cheaper policy choices by adjusting deductibles, loss of income, and property coverage. Many options exist but don’t choose merely the cheapest; choose the cheapest that protects you.
Assess Potential Losses from Cheap Small Business Insurance
Don’t be afraid to consider real numbers for typical losses. The Insurance Journal states that “four out of every 10 small businesses are likely to experience a property or general liability claim in the next 10 years.” A catastrophic loss for one company might be $5,000 while another is $5 million. When you know what you can lose, you can then tailor policies to meet your needs.
Here are some of the most common claims and their average costs:
- Libel or slander: $50,000
- Vehicle accident: $45,000
- Fire damage: $35,000
- Customer injury or damage: $30,000
- Water damage: $17,000
- Burglary: $8,000
As a business owner, you know whether you are in a high-crime area or serve a clientele with higher probability to sue. Look at the common claims and what would be worth covering on your own. Remember that every claim results in premium increases.
Tips When Buying Cheap Business Insurance
Insurance carrier rates change. Carriers may realize that insuring one niche is becoming too costly with higher claims. The underwriting ratings may change. The state insurance commissioner may also demand changes to premiums. Here are some tips to keep cheap small business insurance as cheap as possible.
Shop Small Business General Liability Policies
General liability policies start at $200 annually. Pricing is always contingent on state and industry specifics. General liability policies can start with as little coverage as $300,000, but the standard is $1 million. Understand that double or triple coverage for liability insurance isn’t going to be double or triple the cost. You should shop for rates annually.
Remember that few industries and carriers combine general liability with professional liability. If you are concerned with professional liability, always ask whether it is included. If you shop rates and find another carrier is cheaper, be sure to ask if professional is part of the coverage.
Add Additional Small Business Property Protection
Adding business property can add another $200 to $500 in premium. Business property varies from company to company. Many small businesses start $10,000 or $15,000 to cover computers, office furniture, tools and supplies. Find a number that gets you up and running, but you might choose not to cover the stored desks credenzas.
When you buy new office equipment or furniture, be sure to notify the insurance company of the changes. You want to be covered for new items, not the ones you just donated. Inventory is a separate category covered. Talk to your insurance agent about the coverage for rolling inventory if it pertains to your business.
Check Professional Affiliations for Professional Liability
Most professional associations offer discounted liability policies for members. These policies are often based on group pricing giving individuals adequate professional liability coverage at much lower costs than buying policies as a small business owner. For example, the Association for Childhood Education International offers Educators Professional Liability for $99 annually for $1 million in coverage.
Some of the cheapest insurance you will find is getting group-like rates through professional organizations. Sometimes, there are limitations to the coverage. Be sure to ask when purchasing so you can choose to cover gaps if necessary.
Reducing Small Business Insurance Premiums
There are many ways to reduce business insurance policy premiums. Rates are determined by location, building construction type and all security and safety measures in place. They are also defined by industry and each employee work class. Setting up your business properly can reduce overall insurance premium payments.
Discounts are often provided for leased business locations with newer construction and up to code with sprinklers and fire escapes. Security systems also improve ratings. The insurance agent may ask if the building itself is closed at night ― this is less risk than a strip mall exposed after hours. There may also be discounts for bundling multiple business insurance policies or having professional association affiliations with some carriers.
Look at Available Platforms for Managing Small Business Insurance
Companies that are offering cheaper insurance often use business owner managed online platforms to keep costs down. Bill payments, claim filing, and overall management is often done independently. Make sure all platforms are easy to use, and there are humans accessible when you do have a question or claim.
Frequently Asked Questions (FAQs)
There are many things to consider along with price when looking for cheap small business insurance.
How Much Is Small Business Insurance Per Month?
Small business owners should expect to pay between $200 and $1,000 annually for small business insurance. Prices vary on the size of the company, claim history, overall risk, and business operations residence. Comprehensive coverage costs more than straight general liability insurance. Business owner policies are available in most states for around $500.
What Insurance Does a Small Business Need?
Every business should start with general liability since accidents pose the greatest financial claim risk. Businesses with employees must carry workers compensation. A small business leasing space will be required to buy building coverage and should also consider business property coverage. Review other policy needs like professional liability, cybersecurity, and commercial auto.
How Can I Reduce My Insurance Premiums?
The best way to reduce insurance premiums and keep renewals down is to maintain a low claim history, set employee safety rules, and keep customers safe from hazards. You can also keep costs down with proper inventory and business property calculations, preventing over-insurance. Business locations with modern security and fire safety systems get preferred ratings.
The Bottom Line
Every small business owner should concern himself with not overpaying for business insurance. Shopping for the right insurance rates for the right types of policies helps business owners find cheap business insurance that protects their financial interests. Don’t be sold merely on the premium rate; get covered properly for the money you spend.
While many companies do well to provide comprehensive coverage and make the claims process as easy as possible, one stands out. CoverWallet offers specialized coverage for all types of businesses fast. As soon as you purchase coverage, you have access to a certificate of insurance. Not only that, they offer some of the most competitive rates on the market. Get a free quote online in minutes.