A male business owner in his woodworking shop talks on the phone and discusses how to lower business insurance costs.

How to Save On Small Business Insurance


From researching insurance options to lowering your monthly costs, here's how to manage small business insurance.

Small business owners are a passionate group, committed to the success of their company and the potential rewards of entrepreneurship. And the liability risk that comes from simply doing business? It’s usually not enough to deter them from starting. Still, finding cost-effective ways to protect your company from lawsuits, accidents and more provides not just peace of mind but also a financial safety net that can keep you in business when the unexpected happens.

This is where insurance comes into play. There are multiple types of insurance that small businesses can leverage to reduce their risk during challenging times. Business owners should explore them all, from basic liability insurance to workers' compensation insurance to cyber insurance. The key is finding the right balance of cost-effective insurance products that provide protection—without costing too much.

What Kind of Insurance Do Small Businesses Need?

At the least, most small businesses should purchase general liability insurance. This type of insurance protects your company from risks such as customers getting injured on-site and employees damaging customer property. In the event that someone sues your business, general liability will also cover the cost of the lawsuit, including legal fees and paying out damages (in most cases).

Not only is general liability insurance a smart move financially, but it’s also often a requirement for becoming a contractor to larger businesses and obtaining a commercial lease. Your customers may even ask if you have liability insurance before they’ll hire your company.

Beyond general liability, there are several other types of insurance that small business owners can consider, including:

  • Workers' compensation insurance. If your employees get hurt on the job, workers' compensation insurance will cover their lost wages and related medical costs.
  • Commercial property insurance. These products cover damage or theft related to your company equipment, including tools, office furniture, technology devices and machines.
  • Cyber insurance. A data breach can cost your company thousands of dollars, not to mention put it at risk of lawsuits from customers. Cyber insurance covers costs related to a data breach or other cyber attacks.
  • Errors and omissions insurance. If your business entails providing clients with advice (think financial advisors, consultants, and attorneys), then you may need E&O insurance. This covers lawsuits related to mistakes made by your company.
  • Business income insurance. This reimburses your company for the income lost if your business has to unexpectedly close, say for a natural disaster or building fire.

How to Save on Insurance Costs

Insurance costs can range from hundreds to tens of thousands of dollars annually, depending on the size of your company and the policies you need. Saving on insurance is a smart way to keep your overhead under control.

But, how can you ensure you get the coverage you need, without overspending? Consider these five tips for saving money on your business insurance.

1. Start Small

If your company is relatively new, begin by shopping for and purchasing the insurance you’re certain you need—likely, general liability and workers' compensation, if you have employees. You can add additional products as your company grows.

2. Find a Local Insurance Broker

Spending the time to find a good insurance broker can pay off over the long run. Meet and talk with at least a few different brokers. Look for a company and individual that answers your questions, provides options and understands your specific business and industry.

3. Continue to Shop Around

Even if you have a good relationship with your broker, be sure to compare rates on common types of insurance. If you find that another company is providing similar products for much cheaper, ask your broker for a discount.

4. Ask About Insurance Packages

If you plan on purchasing multiple types of business insurance, inquire about discounts for buying more than one policy. Many companies will bundle their insurance products together and provide a less expensive rate if you purchase more than one product.

5. Review Your Rates Annually

Each year, as you build a budget for your company, take the time to review your insurance costs. Call your broker to see if there are new ways you can save. Explore online options to determine if they can provide additional savings.

In most cases, some form of insurance is a requirement for doing business. Find cost-effective ways to get the protection you and your employees need so that you can focus on the reasons you started your company in the first place.

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