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How Much Does Small Business Liability Insurance Cost?

liability insurance costs for small business

Expenses are a big concern when you run a business. With payroll, taxes, inventory, equipment, and rent to worry about, adding the cost of liability insurance might seem overwhelming if you don't know how to find the best price.

But small business liability coverage is essential. If you're uninsured, you have to pay legal fees out of pocket should an unhappy customer file a claim. That could mean losing significant assets — or even closing your business.

Depending on the type of business you run, you may need several policies to help cover potential liability claims.

In this guide, you'll learn what liability insurance is, what it covers, and how to find an affordable price for your small business liability insurance.

Berxi Small Business Insurance

What Is Small Business Liability Insurance?

Small business liability insurance is a type of insurance policy that covers legal expenses when a customer claims they suffered loss, bodily injury, or personal property damage as a result of your mistake or negligence. Typical policy types include:

  • General liability insurance to cover costs if a customer is injured or suffers damage to personal property while doing business at your location.
  • Product liability insurance to cover claims of harm or illness resulting from a product defect or an error in product instructions, warnings, or labels.
  • Professional liability insurance, also called errors and omissions insurance (E&O), is for handling claims arising from something you do wrong or something you neglect to do.

Together, these policies protect you from suffering significant business losses in situations where:

  • A customer slips and falls or is struck by a moving object while on your premises.
  • You make a calculation error that results in a customer losing a significant amount of money.
  • You forget to give an important piece of advice, which leads to poor outcomes for your customers.
  • You give inaccurate information, which causes a customer to suffer loss or harm.
  • You do not fulfill all contractual obligations for a project or assignment.
  • A repair you perform fails and causes property damage or personal harm.
  • You accidentally cause property damage when working in a customer's home.
  • One of your products malfunctions and results in loss, harm, or property damage.

Yet Forbes reports that 90% of small business owners aren't sure they have enough insurance coverage to protect them financially if a customer files a claim.

How Much Is Small Business Liability Insurance?

Being underinsured — or not insured at all — can be much more expensive than buying a liability insurance policy, especially for small businesses. A report from the U.S. Chamber of Commerce Institute for Legal Reform showed that:

  • Liability costs for small businesses totaled $160 billion in 2021.
  • Small businesses bore 48% of all liability costs in 2021.
  • In proportion to revenue, businesses that made less than $1 million per year had liability costs seven times higher than businesses that made $50 million or more.

Compare these significant numbers to the average small business liability insurance cost. Common policy prices range from $20 to $242 per month ($241 to $2,900 per year).

For example, Berxi policies for a low-risk profession, like a notary, start at about $241 per year. For a financial planner, policies start around $513 per year, and a marketing consultant could pay about $603 annually.

What Factors Affect Small Business Liability Insurance Costs?

Because every business is different, it can be hard to pinpoint what you'll pay without getting a small business insurance quote. A quote reflects a range of details that insurance companies look at when determining your liability premiums, including:

  • Your industry. Businesses in industries where the risk of claims is higher pay more for insurance. These high-risk industries include construction, where errors can cause property damage; healthcare, where mistakes can lead to poor patient outcomes; and manufacturing, where product defects may sicken or harm customers.
  • The size of your business. Businesses with large customer bases and significant sales revenue have a higher probability of claims.
  • How long you've been in business. Established businesses that take proactive measures to reduce the risk of claims may pay less than new businesses that haven't had as much time to develop reliable safety policies.
  • Your revenue. Small business liability insurance is more expensive for businesses with high sales volume due to a greater possibility of product defects or service mistakes.
  • Your location. Businesses in areas where liability claims occur more often generally pay more for insurance. Building size also contributes to costs: a bigger location means more space in which accidents can occur.
  • Your claims history. Insurance companies may see businesses with a higher-than-average number of prior liability claims as high risk and charge more to cover the expected cost of payouts.
  • The coverage options you choose. Policies with higher limits of liability and lower deductibles are more expensive because the insurance company is agreeing to reimburse you for more per claim or policy period.

Other Types of Small Businesses Insurance Coverage

In addition to liability insurance, you may need one or more other policies to cover all potential claim types:

  • Workers' compensation reimburses employees for medical bills, lost wages, disability, and other costs associated with job-related injury or illness. Policy costs are affected by the size of your workforce and the level of risk involved in their jobs.
  • Commercial auto insurance provides coverage similar to personal auto insurance for vehicles you use in your business. Premiums are based on the type and number of vehicles you have, how often and how far they're driven, and employee driving records.
  • Commercial property insurance reimburses you for equipment or property lost to severe weather, fire, or burglary. Policy prices can vary according to location, equipment types, and the coverages you want included in your policy.
  • Business interruption insurance is a good companion to property insurance. If your business must close due to physical damage or losses, your policy will reimburse you for lost income, payroll expenses, taxes, temporary relocation expenses, and rent, lease, or loan payments. Premiums depend on business size, revenue, property value, and industry.
  • Equipment breakdown insurance covers the cost of repairing or replacing damaged or malfunctioning equipment and reimburses you for related revenue loss. These policies also typically pay for inventory or property damage resulting from equipment breakdown. Policy prices can depend on total equipment value, the coverage you choose, and the age of your equipment.
  • Crime insurance covers losses from business crimes like fraud, theft, or embezzlement and includes money, inventory, property, and business assets. Crime insurance premiums are priced according to your business type, the size of your workforce, and your employees' theft history.
  • Cybersecurity insurance is an important policy for businesses that handle sensitive customer or company data. These policies include coverage for costs related to data breaches or cyberattacks, such as incident investigation, risk assessment, ransomware payments, and lost revenue. Premiums are calculated based on factors like the amount of information you store and the most common types of cyber threats in your industry.

Depending on your location, some of these policies may be required by law.

How to Lower the Cost of Your Small Business Liability Insurance

Professional liability insurance and other liability coverage is worth the investment to protect yourself from the higher cost of claims. But if you're concerned about the expense, you can reduce your small business liability insurance costs in several ways:

  • Shop around for quotes. Compare prices on your desired coverage and liability limits between a few insurance providers. Read reviews to get an idea of what it's like to work with each company and how quickly they typically resolve claims. (A lower price may not mean a better experience!)
  • Adjust your deductible and coverage limits. Higher deductibles and lower limits reduce your liability insurance costs for your small business, but it comes at the price of paying more out of pocket in the event of a claim. Weigh the cost-saving benefits against potential risks before making these policy changes.
  • Pay premiums annually instead of monthly. As you compare prices, ask providers whether they offer any professional liability insurance discounts to customers who pay for a full year of coverage up front.
  • Buy direct. Insurance brokers and agents typically charge fees on top of policy costs. You can save up to 15% if you purchase insurance directly from a provider like Berxi instead of through a third party.
  • Bundle your policies. A business owner’s policy packages general liability, commercial property, and business interruption service into a single policy that costs less than purchasing each policy separately. If you choose to get all your coverage through one provider, you may be able to take advantage of additional bundle discounts for other types of insurance.
  • Improve your company's safety. Some insurance companies charge less if your business has protections in place, such as a sprinkler system to mitigate fire damage or a security system to deter theft. Other measures, such as detailed employee safety training and proper lighting around your property, can help lower the risk of accidents — and reduce the likelihood of claims.
  • Ask about other discounts. Check to see whether the insurer provides a savings for professional organization members or a discount for businesses that have never had claims filed against them.

With these discounts, you could get top liability insurance coverage for your small business at a price that fits your budget.

Professional Liability Insurance Costs for Small Business FAQ

When it comes to buying small business insurance, business owners have a lot of questions. Below are answers to some of the most common questions asked about professional liability insurance for small businesses.

Are there any additional or hidden fees in liability insurance costs?

Some insurance companies include a "minimum earned premium" clause that requires you to pay a minimum fee even if you cancel before the policy period ends. For example, if your annual premium is $700 but you cancel after six months, you still owe the company the full $700. To avoid this and other hidden fees, ask companies about their fee structures when you compare insurance prices — and read the fine print!

What is the average cost of professional liability insurance?

Average liability insurance premiums at Berxi range from a few hundred dollars to around $1,000 per year. Factors like industry, business size, claims history, location, and coverage options affect how much you pay.

Here is a chart featuring some prices for Berxi E&O policies:


Low Limits


High Limits


Business Management Consulting



Financial Planner



Graphic Designer



Human Resources Consultant



IT Consultant



Marketing Consultant



Professional Organizer



Tax Preparer






*Rates via Berxi as of March 2024, based on professionals living in Texas, making $50,000 a year, choosing a $1,000 deductible.

How much does LLC insurance cost?

Professional liability insurance costs for a limited liability company (LLC) range from $300 to $1,200 per year. Premiums depend on the same factors that affect small business liability insurance, such as business size and history, risk level, and the scope of coverage.

A business owner's policy (BOP) for an LLC costs about $100 a month and includes general liability, commercial property, and business interruption insurance. Depending on the size of the business and risk profile, some small businesses might pay as little as $500 per year for BOP, while bigger companies could pay over $5,000.

How much is a $1 million insurance policy for a small business?

At Berxi, annual premiums range from $400 to $900 for a small business liability insurance policy that offers $1 million in coverage per policy period to low- to medium-risk businesses with about $100,000 in annual revenue. A higher-risk business could pay over $5,000 for a $1 million policy. (Prices are based on the lowest deductible payment.)

Remember this price includes only professional liability insurance. Your total insurance costs will be higher if you need to purchase additional policies like workers' comp, general liability, or cybersecurity insurance.

How to lower small business liability insurance costs

Some ways to pay less for liability insurance include comparing costs from multiple providers, adjusting your deductible and coverage limits, buying directly from an insurance provider, paying annually instead of monthly, and bundling multiple policies.

How to find low-cost professional liability insurance for your small business

Shopping around is a great way to find low prices on business insurance. Be sure to compare the same coverage types and limits to get an accurate quote. Use this chart to see how Berxi compares to other professional liability insurance coverage options.

How to get a small business insurance quote

You can usually fill out a form online to find out how much liability insurance for small businesses costs. Comparing quotes directly from insurance companies can help you find the lowest prices and avoid third-party fees.

Get an Insurance Quote for Your Small Business!

Professional liability insurance through Berxi's Errors & Omissions insurance policy can offer peace of mind if a customer claims you made a mistake or were negligent in the course of doing business. It’s the insurance you hope you won’t use — but will be glad to have if you ever need it.

Berxi’s policy offers $1 million of limits and covers litigation costs, reimburses you for lost wages, and provides you with a professional liability attorney to support you throughout the claims process. If a customer files a claim, Berxi’s team of claims representatives is there to guide you, answer questions, and connect you with legal experts to ensure you always have the assistance you need.

Whether you’re a consultant, freelancer, real estate broker, financial professional, or independent contractor, E&O coverage from Berxi offers interest-free, transparent pricing on coverage with world-class support. Get a small business insurance quote today to see how much you can save.

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Last updated on Apr 26, 2024.

Originally published on Apr 25, 2024.

The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice.

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