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How should I budget for business insurance?



Your business insurance should cover all possible risks for your business. It may surprise you that as a basic calculation, the full range of business insurance, including commercial liability, commercial property insurance, employee health insurance, workers’ compensation and other insurance policies, should be budgeted at about 20 to 30 percent of expected gross sales. Smaller businesses can expect to budget much less.

Every industry and every business is unique, and business insurance should be tailored to fit the needs of the business.

Business insurance options

The type of business insurance you buy will reflect the size of your business, the number of employees, your facilities, vehicles and the value of all your business assets, along with the inherent risks of your industry. Smaller businesses can invest in general business insurance. The right insurance will cover a range of risks, including injury to customers, suppliers or others, damage to someone else̵

7;s property and paying the costs of defending against lawsuits, up to policy limits. Larger businesses will require a more comprehensive set of insurance policies, which may include:

  • General liability insurance: This insurance is usually ideal for small business owners, as it covers the costs of personal injury lawsuits, third-party claims, defamation lawsuits, copyright infringement, or false advertising.
  • Insurance for commercial properties: Your business assets are valuable and must be protected against loss from theft, damage to fixtures, equipment or office furniture.
  • Interruption insurance: If your business is shut down due to storm damage, fire or other incident, this insurance can help you avoid losing valuable employees and repair the damage.
  • Data breach insurance: If a cyber breach has stolen the private information of your customers, clients, patients, employees or others, the costs can be astronomical. Many companies choose to invest in this insurance, as cybercrime is at an all-time high.
  • Commercial Umbrella Insurance: This policy adds another layer of protection to your liability coverage.
  • Commercial Auto Insurance: If your business uses vehicles, commercial auto insurance can protect you should an employee be injured, cause an accident or other incident.
  • Business Owner Policy: These policies are designed for small businesses and cover both property and liability insurance.
  • Liability insurance for forms of employment: This insurance protects companies from lawsuits related to the treatment of current or former employees, such as claims of discrimination, faulty terminal, sexual harassment, etc.
  • Product liability insurance: If your business sells a product, this policy protects against losses if your business is accused of a product causing harm or injury to a consumer, including manufacturing, design, marketing and consumer use.

How to choose the right business insurance

When choosing your business insurance policies, the reputation of the insurance company is important. A good online quote may not be the best way to find a provider you can trust to come through when you need it. It is always recommended that you work with an insurance agent who understands what you are doing and can advise you on the insurance you need. A professional can search for the most affordable business insurance policies on the market that offer the best coverage. Contact our local agent for a tailored approach to business insurance.


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