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12 Ways to Save Money on Small Business Insurance

insurance, small business
  |   5 minute read

Finding ways to efficiently run your small business while managing operational costs is enough of a balancing act – even more so when you have to wonder how much you should be spending on necessities like small business insurance.

How do you know if you’re overpaying? What does the average small business spend on insurance? The short answer is, it depends. But as experts in small business insurance, we’ve rounded up 12 cost-saving tips so you can make the best decisions for you and your business.

How Much Does Small Business Insurance Cost?

First, to better understand how much money the average small business spends on insurance, it’s important to consider the biggest factors that impact cost.

Your Coverage Needs

The type and amount of coverage you need varies, but the first question you should be asking yourself when shopping for small business insurance is whether or not you’re legally and/or contractually required to carry certain policies. For instance, most states require small businesses to carry workers’ compensation insurance.

Additionally, there may be certain policies to consider based on the type of work you do. For example, if your business uses vehicles, you’ll need to think about commercial auto insurance.

Your Industry

The inherent risk in the work or nature of your business also determines cost. Generally speaking, the more risk your business poses, the more you’ll be paying for coverage.

Learn more about work comp in your industry.

Your Claim Potential

Another factor to consider is how much is at stake. This could be human (employee or customer injury), property (building, inventory) or something else (data breach, intellectual property).

Small Business Insurance Rates

Just like personal insurance, a commercial insurance policy protects businesses when something unplanned occurs. Policies are right-sized for the amount of exposure a business might have, and small business insurance rates reflect that.

Depending on the state(s) in which your business operates, insurance rates may be set by a governing body (e.g. workers’ compensation) or by the insurance carrier. Find out what ruling body sets workers’ compensation rates in your state.

It’s important to know that rates are just one piece of the underwriting process, which will ultimately result in your quoted premium.

How to Save on Commercial Insurance Policies


The right insurance agent is a partner in your business success, which should include getting the right coverage for the right price. Talk to your agent about the below strategies, and see what advice they have on where you could save.

Shop Smart When Buying New Policies

1. Buy a reasonable amount of coverage for your needs. Find out what typical policies and limits are for a business like yours. Remember: Under-insuring your business can be more expensive than over-insuring.

2. Read the fine print. Read specifically what is (and is not) covered by your policy. Read limits and terms of the policy, and if you don’t understand something, ask your insurance agent to walk you through it.

3. Shop around. Compare policies to find the right coverage at a fair price. Request a quote from multiple carriers, or work with an independent agent. Independent insurance agencies represent multiple carriers, which means they can shop around your quote and bring back the best option for you. Better yet, find an independent agent that specializes in small business insurance.

4. Consider bundling policies. A Business Owner’s Policy (BOP) is the most common way to bundle commercial policies. It typically combines general liability and commercial property insurance at a lower price than purchasing policies separately. But not all policies should be bundled. For more complex exposures, turn to an expert in that line of insurance to get the right coverage.

5. Look at financial stability. Like any business partner, evaluate carriers for their solvency and reputation. A.M. Best and Standard & Poor’s are two rating providers in the insurance industry.

6. Classify workers correctly. When buying workers’ compensation insurance, it’s important to classify workers accurately. Classification Codes are numeric codes used nationwide to categorize employees and set insurance rates. An insurance agent experienced with work comp can help you navigate this.

Related Read: 4 Tips for Smart Small Business Insurance Shopping

Optimize Your Existing Coverage

7. Consider altering policy details. Opting for a higher deductible or lower policy limits may reduce your annual premium. Just be sure you choose the right option for your business’s cash flow and risk tolerance.

8. Adjust payment terms. Similarly, see if paying your policy upfront or adjusting payment terms is advantageous. Sometimes even if it doesn’t reduce your premium, paying in larger installments may reduce billing fees tacked onto each payment. These savings can add up.

9. Review and update coverage annually. Don’t skip the opportunity to revisit your policies at renewal. If your business model, size, geographic market, payroll or exposures have changed over the past year, make sure your new policies reflect these changes.

Plan Ahead for Long-Term Savings

10. Make sure your broad exposures are covered - and specific situations considered. Common policies all small businesses may need include general liability, professional liability and workers’ compensation. Don’t overlook large areas of exposure that can be covered with policies. Similarly, bring up any specific risks your business might face. Ask your agent if these are covered under an existing policy, or if any specific endorsements might be beneficial.

11. Be proactive. Implement common-sense measures to protect your business. Make a safety manual for employees. Password protect your Wifi network and electronic devices. Install a fire suppression system. When in doubt, ask your insurance agent. Your carrier might have tip sheets, trainings or even formal programs that will protect your business - and might make you eligible for a premium credit.

12. Ask your agent about carrier discounts and how to bring down costs. Your agency may have tips to help you better manage risk or take advantage of carrier programs to earn credits on your next premium. Claims-free discounts, loss-prevention programs and group rates could all result in savings.

Get Workers’ Compensation Insurance for Your Small Business

WorkCompOne was created to serve the needs of small businesses. Interested in work comp? You can get started on a free, no-obligation quote on your next coffee break.

Get a workers’ compensation insurance quote today, in 5 easy steps!


Editor's note: This post was originally published in January 2019 and has been updated for accuracy and comprehensiveness. 

Tags: insurance, small business