You're finally doing it. The LLC is filed, the website is live, and you've got your first three clients lined up. Then someone mentions "general liability" or "workers' comp," and suddenly you’re staring at a spreadsheet wondering if you need to sell a kidney to stay legal.
The short answer? Honestly, it’s probably cheaper than you think, but it's also rising faster than most business owners expected.
If you’re looking for a ballpark, most tiny operations—think solo consultants or small retail shops—end up paying somewhere between $50 and $200 per month for their core coverage. But "average" is a dangerous word in the insurance world. A guy running a landscaping crew with four employees is going to pay a massive premium compared to a graphic designer working from a home office.
How much does insurance cost for a small business right now?
We’re seeing some weird shifts in 2026. According to recent data from KFF and various industry filings, health insurance premiums for small groups are projected to jump by a median of 11% this year. If you’re offering health benefits, that’s your biggest line item.
For the "property and casualty" side—the stuff that protects your laptop, your office, and your legal defense—the numbers look a bit like this:
- General Liability: Usually the first thing you buy. It averages about $42 to $67 per month. It’s your "slip and fall" protection.
- Business Owner’s Policy (BOP): This is the "bundle" of the insurance world. It combines liability with property insurance. It typically lands around $57 to $118 per month. It’s almost always a better deal than buying them separately.
- Professional Liability (E&O): If you give advice for a living (like an accountant or a coach), you need this. Expect to pay about $60 a month, though tech consultants often see higher rates around $145 because a coding error can cost a client millions.
- Workers’ Compensation: If you have even one employee, most states make this mandatory. The average is about $45 a month, but that is wildly dependent on your payroll and how dangerous the job is.
The industry "tax" you can't avoid
Insurers don't see all businesses as equal. If you're a florist, your risk of burning down a building or getting sued for a million dollars is pretty low. If you’re a roofing contractor? Different story.
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A consultant might pay $30 a month for general liability. A construction company? They’re likely looking at $80 to $90 a month for the exact same policy limits. It’s basically a risk tax.
Why your quote looks different than your neighbor's
You’ve probably noticed that insurance companies ask a million questions. They aren’t just being nosy. They’re trying to figure out how likely you are to file a claim.
Location matters more than you'd think. If you’re in a high-crime area or a place prone to wildfires—looking at you, California and parts of the West—your property insurance is going to sting. Even state laws change things. A workers' comp policy in Alabama might cost twice as much as the same policy in Texas because of how that state handles medical benefits and legal disputes.
The "Claims Ghost" is real.
If you’ve filed a claim in the last three years, expect a "surcharge." It’s frustrating, but insurers see a past claim as a predictor of a future one. Even a small $2,000 theft claim can hike your premium by 15% for several years.
Your payroll is the lever.
For workers' comp specifically, your cost is a math problem: (Payroll / 100) x Class Code Rate. If you give everyone a 10% raise, your insurance bill goes up 10% too. It’s a direct link.
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Surprising factors that move the needle
Most people forget about Commercial Auto. If you use your personal car to deliver products or visit clients, your personal insurance probably won't cover an accident. A commercial auto policy averages about $147 per month, and it's one of the most common gaps small business owners have.
Then there’s Cyber Insurance. In 2026, hackers aren't just going after the Big Guys. Small businesses are easier targets. A basic cyber policy is roughly $145 a month, which sounds steep until you realize the average data breach cost for a small firm is now well over $100,000.
Breaking down the big categories
General Liability: The "Must-Have"
This covers third-party bodily injury. If a customer trips over a rug in your shop, this is the policy that pays their medical bills and your lawyer. Most people opt for a $1 million per occurrence / $2 million aggregate limit.
The Business Owner's Policy (BOP)
Think of this as the "Starter Pack." It includes liability and covers your "stuff"—your inventory, your desks, your computers. Most insurers won't sell a BOP to high-risk industries (like a tree-trimming service), but for retail, offices, and cafes, it's the gold standard.
Professional Liability (Errors & Omissions)
If you provide a service or advice, you need this. A web designer whose site goes down during a client's big product launch could be sued for lost revenue. General liability won't cover that. You need E&O.
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How to actually lower the bill
Don't just take the first quote. Seriously. Use a broker who can shop multiple carriers like The Hartford, Travelers, or Progressive.
- Higher Deductibles: If you can afford to pay $1,000 out of pocket instead of $500 if something goes wrong, your monthly premium will drop significantly.
- Annual Payments: Most insurers give you a 5% to 10% discount if you pay the whole year upfront instead of monthly.
- Safety Programs: For workers' comp, having a written safety manual or a "return to work" program can sometimes trigger discounts.
- Professional Memberships: Sometimes joining a trade association gives you access to "group rates" that are much lower than the open market.
What you should do next
The worst thing you can do is wait until you have a contract that requires insurance to start looking.
First, audit your current risk. Do you have employees? Do you have a physical office? Do you handle sensitive client data?
Second, get at least three quotes. But don't just look at the price. Look at the "exclusions." A cheap policy that doesn't cover the specific thing you do is just a waste of money.
Finally, review your coverage every year. As your revenue grows or you hire more people, your old limits might not be enough. In 2026, the "standard" $1 million limit is starting to look a bit thin for many industries due to legal inflation.
Insurance is a "set it and forget it" thing for a lot of people, but checking in on it once a year can save you a few hundred bucks or, more importantly, save your entire business from a lawsuit that would otherwise wipe you out.
Gather your payroll estimates and your gross revenue numbers for the last 12 months. Having those ready will make the quoting process way faster. Then, reach out to a broker or use an online platform to see where your specific industry stands.