When shopping for insurance, you’ll likely need to strike a balance between finding the cheapest business insurance and purchasing a policy that will protect your business. Good news—it’s possible to find quality coverage at an affordable price!
Start by identifying the right policies for your business and bundling those coverages. Then, compare insurance companies’ offerings and look for discounts. You’ll also want to manage the limits and deductibles of your policy and minimize risks to your business (more on that below) to decrease the chance of claims. Keep reading to learn six smart ways to save money on business insurance.
1. Determine the Coverage You Need
When considering how to save money on small business insurance, the first step is to understand what type of coverage your business needs. Finding the cheapest business insurance for a larger business that provides professional services and has multiple employees will almost certainly be a challenge—but that doesn’t mean it can’t be done.
While the list below is not exhaustive, it includes the most common types of small business insurance coverage:
Common Coverages | What It Covers |
|---|---|
General Liability | Claims against property damage, bodily injury, advertising injury, and reputational harm |
Professional Liability | Claims that your advice or service led to financial loss or harm |
Commercial Property | Damage to a listed property you own |
Inland Marine | Equipment and tools that are not at a fixed location |
Commercial Auto | Damage to your vehicle and caused by your vehicle |
Workers’ Compensation | Medical bills and lost income from a work-related injury or illness |
Cyber Liability | Cost to respond to a data breach |
The primary coverages you’ll likely need for your small business are general liability, commercial property, and inland marine for tools. Depending on your state, workers’ compensation insurance may be required.
Note that it is possible to overspend by purchasing more insurance than you need. The best way to avoid this is to have a clear understanding of your business and what the coverages provide and to have a serious conversation with your agent about what type of insurance your business needs.
Commercial general liability is the broadest and most common form of liability insurance for a small business. It offers protection against third-party claims that someone was injured or property was damaged due to your business’ negligence. It also includes protection against claims of advertising injury and reputational harm. Usually, general liability policies will include premise coverage for a rented location.
Note that general liability is calculated differently for different businesses, meaning the premium can vary widely by industry. If you need guidance around this, then see our article on how a general liability premium is calculated.
While general liability is the broadest and most common type of coverage, it doesn’t have to be the most expensive. If you’re looking for the cheapest general liability insurance companies, we’ve got you covered with our rundown that factored pricing into it.
Professional liability coverage, often called errors and omissions insurance, covers mistakes made by your business that result in a financial loss or harm to a third party. This is a core policy for service-oriented businesses like consultants, counselors, accountants, photographers, or pastors.
This first-party coverage is important for businesses that own property. A commercial property policy can cover a building you own, or the office equipment and furniture you own in a space you rent for your business. This type of policy usually provides coverage only for listed locations and for listed perils, meaning if a listed location suffered a loss from fire or theft, then you could file a claim.
An inland marine insurance policy is a first-party coverage for your property that is not fixed but moves around—think of tools and equipment for someone like a contractor or painter. Many insurers will offer to include this with a general liability policy.
If your business owns a vehicle or uses one specifically for work, then you will need a commercial auto insurance policy. The coverages provided by commercial auto—first-party coverages and liability—are nearly identical to a personal auto policy. If your landscaping business has a dedicated work truck, or if you plow snow in the winter, this is coverage you should consider.
Workers’ compensation insurance is required in nearly every state for companies with employees—with some even requiring self-employed workers’ comp insurance. It helps an employee who was injured or became ill because of a job by helping pay medical costs and providing wage replacement. It also helps the employer by protecting them from lawsuits and helping the injured employee return to work.
Cyber liability insurance has different levels of protection and services depending on what policy you buy but, ultimately, this is important coverage for any business that stores sensitive information online or works in the online retail space. It helps your business if you suffer a data breach by responding appropriately to all impacted parties.
2. Bundle Coverages
Another way to save money on your business insurance is to find out if the insurer offers any discounts for bundling coverages. Bundling can take different forms. You can get a business owner’s policy (BOP), a commercial package policy (CPP), or multiple policies with one provider.
BOP
A BOP is the most common type of insurance bundle, combining two policies: commercial property and general liability. Most insurers also include lost business income in a BOP.
Purchasing a BOP comes with two main advantages:
- Cost: Most insurers offer a 10% to 20% discount when you purchase a BOP.
- Convenience: You will have one policy for multiple coverages, making it easier to manage the policy and file claims.
Not every business is eligible for a BOP. The criterion varies by carrier—another good reason to shop around—but they generally place limits on the number of employees, amount of revenue, and physical size of the business that the carrier will offer a BOP. For example, a BOP is usually intended for less risky businesses with 100 or fewer employees and revenue capped at around $5 million.
CPP
If your business is too big for a BOP, then you may want to check out a CPP. A CPP combines two or more policies. It’s more flexible than a BOP because you can bundle coverages beyond property and general liability, such as commercial auto.
Multiple Policies From the Same Provider
Even if the policies you purchase from one company cannot be bundled to make one policy, some insurers offer a discount if you purchase several policies through them.
3. Compare Quotes
To get insurance for your business, you can work with an agent, a broker, or directly with a carrier. If you need guidance on whom to choose, refer to our comparison of insurance broker vs carrier.
One advantage of working with a broker is being able to compare quotes from multiple insurers simultaneously. Take your time—it is OK to go a step further by comparing those quotes to ones from another broker. And even if the other broker works with the same carrier, that doesn’t mean the quote will be the same. If you do this, you may be surprised at the level of coverage offered, the wide range of premiums, and the amount of money you can save.
Consider these quotes we received from three different online brokers. The business we sought a quote for was a small retail business with three employees and an annual revenue of $160,000. Click on each tab to see the quote(s) received.
In the example, we were able to obtain seven quotes for the same business from three different online brokers. The cheapest BOP was from CyberPolicy for $485 annually, with the policy underwritten by Chubb. The most expensive BOP was $972 annually, for a difference of $487.
If we had only needed general liability, the cheapest policy would have been from Simply Business for $303 annually. Simply Business is one of our cheapest general liability insurance companies, specifically for comparing quotes.
4. Look for Discounts
Finding discounts is an important way to find the cheapest business insurance for a small business. Discounts are usually spelled out on insurers’ websites. Here are several examples:
- Home-based business: Some insurers, such as Hiscox, offer discounts for home-based businesses.
- Paid-in-full discount: Many customers will save, sometimes as much as 15%, when they pay their policy in full. Conversely, many insurance companies charge more if you pay monthly installments.
- Safe driving programs: If you need commercial auto insurance, insurers like Progressive offer telematic programs to monitor safe driving and will provide a discount if you participate.
- Licensure: If your field has optional certifications, obtaining these may result in a discount for your policy.
- Membership: Many professional organizations have deals worked out with carriers to provide discounted insurance rates to their members.
Other discounts may not be indicated but are applied to the quote—these are called built-in discounts. For example, when you are getting a quote, the insurer may ask questions about:
- Sprinklers, fire alarms, and security systems
- Training in alcohol awareness programs, such as Training for Intervention Procedures (TIPS) for restaurants serving alcohol
- Firewall, data storage, backup, and protection
Depending on your answers, the premium price can be higher or lower. Risk management is a great way to take advantage of built-in discounts.
5. Manage Limits & Deductibles
The limits your business needs are related to your level of risk and the value of the property you need insured. It is possible to have your property either overinsured or underinsured. Reviewing what limit is right for your business with an agent or a broker may lead to some savings on your premium.
Policy Limits
The policy limit is the total amount of coverage available either per claim or for the policy term—and it’s not one size fits all. But often, when getting a quote, the insurer will offer a general liability limit of $1 million per occurrence and $2 million aggregate regardless of the size of the business, number of employees, or revenue.
Those baseline limit amounts may be too much or too little for your business. If the limit amount is too much, then you can save money by lowering it to be more in line with your company’s type of revenue, assets, and risk level.
Some insurers will perform a general liability audit. Similar to a workers’ comp audit (see our guide on how to prepare for a workers’ comp audit), this will examine your payroll, revenue, and risk to determine if your coverage is correct. This is a good way to ensure your limits are appropriate for your business. If the insurer determines your limits are too high, it can issue you a refund for the overpayment on the premium.
Other insurance companies, such as Next Insurance, will give you multiple options with different limits when you are getting a quote. Doing so gives you some flexibility in picking a policy with a correspondingly appropriate cost.
For the purposes of this article, we received three quotes from Next for a retail store. The quotes were broken down with different limits and amounts of coverage:
- Basic: $25 monthly, with $1 million in total general and product liability.
- Premier: $57.26 monthly, with $2 million in total general and product liability and $17,000 in business property coverage.
- Deluxe: $101.26 monthly, with everything offered in Premier plus other additions like equipment breakdown and $50,000 in lost business income if your website goes down.
Depending on your business, the Basic plan’s $1 million limit may be all you need, so you would only have to spend $25 a month for insurance. However, if your business has property or larger operations, then you would want to select either Premier or Deluxe.
Insurance Deductible
Another way to save money is by raising your insurance deductible, which is the amount you agree to pay when you file a claim, regardless of who is at fault. The deductible usually applies for the same amount every time you file a claim.
If you raise it from $500 to $2,000, then your premium will usually decrease. Of course, by raising your deductible you take on a bit of risk because you are agreeing to pay more out of pocket when you have a claim.
6. Manage Risk
A key part of determining the premium is your claims history. This means doing whatever you can to minimize the risks that lead to claims that, in turn, can help you save money on business insurance.
Managing risk will look different for every business, but there are many common steps you can take, such as:
- Cleaning up spills immediately
- Keeping walkways clear of any tripping hazards
- Maintaining safety equipment, such as sprinklers and smoke alarms
- Posting signs if there’s a problem
- Using written contracts and keeping records of all communication
- Teaching employees how to avoid cybercriminals
Most carriers have risk management engineers and offer risk management assessments. Taking advantage of these can help reduce your frequency of claims, thus helping keep your premium low.
For example, Hiscox offers Upfort Shield for free to its cybersecurity insurance policyholders. Insureds that have used Upfort Shield end up filing claims at a rate of less than half of the insureds who do not use it. Some insurers may also offer a discount for completing risk management training.
Insurance carriers use class codes to classify risk. To learn about this, read our guide on general liability insurance class codes. It covers how they work and how they impact your premium.
Frequently Asked Questions (FAQs)
Year over year, insurance premiums have been rising. Much of this has nothing to do with individual businesses but instead with the overall insurance market. For example, catastrophic losses from natural disasters or inflation can drive up the cost of repair for property and auto. Unfortunately, many of these factors are out of your control.
Despite the increased costs, you can still save money on business insurance. Look for discounts from insurers, compare quotes before purchasing, and ensure you purchase only the insurance your business needs.
Bottom Line
Purchasing cheap small business insurance while still maintaining quality coverage can be tricky. By following our six ways to save money on business insurance, you can adequately protect your business without breaking the bank on your premium.
Next Insurance is a small business insurance provider that will work directly with you and provide tailored coverage options to fit your business needs. You can get a quote and purchase a policy online in minutes, and then manage that policy online or on its app. As a bonus for those looking to save money, it does not charge more for insurers paying monthly.
