Starting a new business is risky, and all the requirements may have you overwhelmed. If you are tempted to skimp on some expenses, insurance coverage is one thing to budget for from the start. The situation for every new owner is different, but here are several key factors that affect small business insurance costs.

1. Coverage Type

Costs vary for each of the many different business insurance types, including essentials like general liability, workers’ compensation and commercial property. Most agencies provide a portfolio of services at a discount, so purchasing multiple small business insurance coverage policies from a single provider can be cost-effective.

2. Industry and Product Risk

The cost for insurance also depends upon your industry and type of business. Dangerous industries or those with greater professional liability carry more risk, so insurance expenses are higher. Likewise, expect a higher cost if you sell more expensive items with a greater theft threat.

3. Location

Where the business is located influences insurance costs. These location-based factors can make a difference:

  • Local, regional and state laws
  • Frequency of natural disasters and weather-related damage
  • Rental versus owned space
  • Crime rate

4. Business Size

For some insurance types, premiums increase with the number of employees. This is true with types like workers’ compensation and professional liability, because there is more chance that a claim will be filed.

Many factors determine costs for small business insurance coverage policies. The important thing is that not carrying any insurance can end up being the most expensive option.