How Much Does Business Insurance Cost?

Quick answer: Most small businesses pay around $40 per month (about $500+ annually) for basic general liability coverage, based on 2024 median premiums reported by Simply Business, which analyzed thousands of small-business policies purchased across the U.S. Broader bundles like a Business Owner’s Policy typically run about $600–$1,000 per year, depending on your industry, number of employees, and location.

Business insurance is more affordable than most new owners expect. From general liability to workers' compensation, here's what you need to know about costs, coverage, and how to save.

What Are the Main Types of Business Insurance?

Understanding the core types of business insurance makes it much easier to figure out what coverage your business actually needs — and what you can skip. Once you know what each policy does, it’s much easier to choose the right coverage without overspending.

• General Liability Insurance protects against customer injuries and property damage claims. If someone slips in your store or you damage a client's property, this covers legal costs and settlements.
• Workers' Compensation Insurance covers medical costs and lost wages when employees get injured on the job, and it’s required in most states once you hire your first employee, according to the U.S. Department of Labor’s workers’ compensation guidance.
• Professional Liability Insurance protects service-based businesses against claims of mistakes, negligence, or failure to deliver promised services.
• Commercial Property Insurance covers your business equipment, inventory, and physical property from theft, fire, or damage.
• Business Owner's Policy (BOP) bundles general liability and commercial property coverage at a discount, often adding business interruption coverage too.

What Types of Business Insurance Do I Need?

The right coverage mix depends heavily on your business model, your risks, and whether you have employees. Start with workers' compensation if you have employees—it's legally required in most states, in accordance with the U.S. Department of Labor. After that, the right mix depends on the kind of business you run.

• For restaurants and food businesses, general liability is essential for customer slip-and-fall risks, and workers’ comp is usually one of your biggest exposures. Many restaurants also carry a Business Owner’s Policy to bundle liability and property coverage.
• For retail shops, general liability and property coverage matter most, especially if you hold inventory. A BOP often makes sense here, too.
• For service-based businesses, professional liability becomes key, since clients can claim errors or missed deliverables. Pair it with general liability for broader protection.

And don’t forget: beyond business insurance, you’ll still need to handle employer requirements like unemployment insurance and, if you have 50+ full-time employees, health insurance requirements outlined by the U.S. Small Business Administration in its small-business insurance guidance.

How Much Does Each Type of Business Insurance Cost?

Insurance premiums vary widely, but most small businesses fall into predictable cost brackets based on their industry and risk level:

• General liability: usually around $400–$500 a year, sometimes more for larger teams, based on 2024 median premiums published by Simply Business.
• Workers’ comp: on average, $1,032 a year, or $86 a month, according to 2024 cost data from The Hartford, based on average premiums paid by its small-business customers.
• Professional liability: typically $672 a year, based on Simply Business’s 2024 analysis of policies purchased by small businesses.

Many businesses lower costs with a Business Owner’s Policy (BOP), which bundles core coverages for roughly $1,500–$1,600 annually.

What Affects Business Insurance Costs?

Insurers calculate your premium using a handful of predictable risk factors that can raise or lower your costs:

• Industry type sets your starting point. A neighborhood restaurant or café usually pays more for workers’ comp than a boutique or salon because kitchen and back-of-house injuries are more common. Retail shops tend to have lower liability risks but higher property exposure if they carry a lot of inventory.
• Business size plays a big role. When a team grows from 5 to 15 employees, payroll increases quickly—and workers’ comp premiums often climb right alongside it.
• Location matters, too. A small restaurant in California or New York can pay significantly more for workers’ comp than the same restaurant in Texas or Utah because of state regulations and claim trends. And businesses in hurricane-prone or high-crime areas often see higher property and liability rates.

Your claims history also follows you. Even one injury or liability claim can raise premiums for several years, which is why consistent safety practices pay off.

How Can You Save Money on Business Insurance?

Even if insurance feels expensive, there are several ways to reduce premiums without sacrificing essential coverage, and you don't have to accept the first quote you find:

1. Bundle your policies. BOPs can save several hundred dollars annually. One carrier, one renewal date, lower total cost.
2. Increase deductibles strategically. Moving to a higher deductible can save 15-25% on premiums. Just make sure you have cash reserves to cover higher out-of-pocket costs.
3. Pay annually instead of monthly. Many carriers offer discounts for lump-sum payments.
4. Build safer teams. A clean claims history qualifies for significant discounts, with potential savings up to 15%.

Reduce Your Workers’ Compensation Costs with Homebase

Because workers’ comp premiums are tied directly to payroll, accurate time tracking can make a meaningful difference in what you pay. Even small time-tracking errors can inflate your reported payroll and push premiums higher than they need to be.

Homebase handles scheduling, time tracking, and payroll in one place, so the hours you report for workers’ comp are clean and consistent. That means fewer audit surprises, fewer adjustments, and premiums that actually match the work your team performs.

Trying to reduce your costs? Get 6 months of Homebase free. 

Sources and Methodology

At Homebase, we rely on up-to-date, authoritative sources to ensure every Question Center article reflects accurate guidance for small business owners. We begin with primary information from federal agencies, verify details using trusted insurance industry data, and use reputable cost analyses only to supplement—not replace—official requirements.

For this piece, we referenced insurance cost data from Insureon, Simply Business, Business.com, and The Hartford, as well as guidance from the U.S. Department of Labor and the U.S. Small Business Administration.

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