How it works
Commercial insurance is priced on class code first and size second. An accountancy practice and a roofing contractor with identical revenue can differ by a factor of five, because the underwriter is pricing the work rather than the balance sheet. This calculator builds the estimate from four coverages that between them cover most small businesses. General liability responds to third-party injury and property damage — the customer who slips, the wall you damage on a client site — and is priced against revenue and class code. Workers compensation is priced per $100 of payroll against your state class code, which is why the industry you select moves it far more than headcount does; rates range from well under half a percent of payroll for office work to over five percent for the trades. Commercial property covers your equipment, inventory and tenant improvements, priced against insured value. Professional liability, also called errors and omissions, responds when your advice or work product causes a client financial loss, and general liability specifically excludes that. Two structural points are worth knowing before you get quotes. A business owner's policy bundles general liability and property at a discount and beats buying them separately at this size. And workers compensation is mandatory from the first employee in most states, where the penalty for going without it usually dwarfs the premium it would have cost.
Formula
GL = revenue x 0.45% x class factor | WC = payroll x state class rate | Property = value x 0.6% x class factor | E&O = max($600, revenue x 0.75%)
Tips
- Ask for a business owner's policy (BOP) quote — bundling general liability and property nearly always beats separate policies at small-business scale.
- Verify your workers compensation class code; a misclassified payroll is one of the most common and most expensive errors on a commercial policy.
- General liability excludes professional mistakes. If you advise, design or consult, errors and omissions is the coverage that responds.
- Cyber liability is not included in general liability and is increasingly required by enterprise clients before they will sign.
- Audit your policy after growth — an under-reported payroll or revenue figure triggers a premium audit bill at renewal.
Frequently asked questions
- How much does small business insurance cost?
- General liability commonly runs $500 to $3,000 a year for a small low-risk business, and a business owner's policy bundling liability and property often lands between $1,200 and $4,000. Workers compensation is separate and depends on payroll and class code, which can add far more for trades.
- How is workers compensation premium calculated?
- It is your payroll divided by 100, multiplied by your state's rate for each job class code, then adjusted by an experience modifier reflecting your claims history. Office roles carry rates under $0.50 per $100 of payroll while roofing can exceed $20, which is why classification accuracy matters so much.
- Do I need business insurance for a one-person company?
- Usually yes, and often because someone else requires it. Client contracts, commercial leases and licensing boards routinely demand a certificate of general liability. Beyond that, an LLC protects your personal assets from business debts but does nothing to pay a claim.
- What is the difference between general and professional liability?
- General liability covers bodily injury and property damage to third parties — physical harm. Professional liability covers financial loss caused by your advice, service or work product, which general liability explicitly excludes. Advisory and service businesses generally need both.
- What is a business owner's policy?
- A BOP bundles general liability, commercial property and business interruption coverage into one policy at a lower price than buying the parts separately. It is designed for small and mid-size businesses in lower-hazard classes, and it is the usual starting point for a first commercial policy.