The Business of Business Insurance

ISU Armac Insurance Services did some research into the business of business insurance and found most small businesses will spend between $500 and $3,000 a year for basic commercial business insurance.

General liability, workers’ compensation and commercial property insurance will run from $42 to $67 a month while commercial auto will hit a business with an average of $147 a month.

“Industry hazard level plays a huge role in what you’ll pay. A computer repair shop handling valuable customer equipment typically pays more for general liability than, say, a consulting business,” the ISU Armac report said. “Restaurants face higher rates because of fire risks and the potential for customer injuries. Construction companies often pay double the average for property insurance simply because of the risks associated with their equipment and operations.”

Size matters, too. As revenue and business size grows, so does the cost. The frequency of claims filed also impacts premium sizes. A bunch of small claims will hurt a business more than one large claim. ISU Armac said frequent small claims are viewed by insurers as a sign of poor risk management.

Coming into play is the size of the commercial insurance market. The Business Research Company said in 2025 that figure sits right around $845 billion. By 2029 it will hit $1235.92 billion with a compound annual growth of 10%.

That brings us to the three states with the most expensive business insurance costs. It is no surprise that the PIA Western Alliance state of California tops the top three.

1. California has very strict regulations combined with litigation rates that are off the charts, and a lot of natural disaster risks like wildfires and earthquakes.

2. Florida, hurricanes and a litigation friendly state make business insurance very expensive.

3. Texas has tornadoes, hail storms and flooding which are a huge business insurance issue.

The least expensive states are harder to predict. The PIA Western Alliance state of Idaho is the least expensive.

1. Idaho has a low population density and fewer natural disasters which keeps rates down.

2. Utah is a business-friendly state and the mild weather helps.

3. Wisconsin has low litigation rates and moderate weather.

Source link: PropertyCasualty360.com — https://bit.ly/4nAyJ6a