Small business insurance

 Small business insurance provides financial protection against losses. The types of risks covered vary by policy and can include property damage, employee injuries and illnesses, liability and lawsuits, or acts such as cybercrime or employee theft. 

Compare small business insurance companies

Small business owners have plenty of insurers to choose from. Here’s how a selection of those companies stack up.

CompanyAM Best RatingJD Power RankingAvailable Coverages

Company

Allstate

AM Best Rating

A+

JD Power Ranking

4th (852 points)

Available Coverages

Business Owner’s Policy (BOP), Property, Liability, Business Interruption, Equipment Breakdown, Commercial Auto

Company

Chubb

AM Best Rating

A++

JD Power Ranking

2nd (855 points)

Available Coverages

Workers’ Compensation, BOP, Cyber Insurance, Management & Professional Liability, General Liability, Business Umbrella, International Advantage

Company

Next Insurance

AM Best Rating

A-

JD Power Ranking

Not included

Available Coverages

General Liability, Workers’ Compensation, BOP, Commercial Auto, Commercial Property, Professional Liability, Business Property, Product Liability

Company

New Jersey Manufacturers (NJM)

AM Best Rating

A+

JD Power Ranking

Not included

Available Coverages

Workers’ Compensation, Commercial Auto, Commercial Package Policy, BOP, Commercial Excess and Umbrella, General Liability, Employment Practices Liability Insurance (EPLI), Cyber Insurance

Company

Progressive

AM Best Rating

A+

JD Power Ranking

Not included

Available Coverages

BOP, Professional Liability, General Liability, Workers’ Compensation, Cyber Insurance, Commercial Auto, Contractors Liability

Company

State Farm

AM Best Rating

A++

JD Power Ranking

1st (856 points)

Available Coverages

BOP, Commercial Auto, Liability, Workers’ Compensation, Inland Marine, Errors and Omissions (E&O), EPLI, Small Business Life (Key Person)Methodology

We reviewed several leading providers of small business insurance, evaluating those companies on their coverages offered, independent ratings and rankings, and overall ease of use.

AM Best is a leading global provider of analytics and ratings specializing in the insurance industry. Its ratings indicate a company's financial strength and ability to pay claims.

JD Power provides insights into consumers' interactions with brands in various industries, including insurance. Its 2022 small business insurance customer satisfaction rankings are on a scale of 1,000 possible points and based on responses from 2,254 small commercial insurance customers. "Not included" means the company did not feature in JD Power's 2022 top 10 rankings.

Available coverages are based on what each company lists on its website.

The best small business insurance companiesAllstate

Allstate offers a line of insurance for small businesses. Its coverages include BOP, property coverage, business liability, business interruption, equipment breakdown, and commercial auto. 

Allstate’s overall ease of use seems to lag behind some other companies in our review. You can get a quote for a commercial auto policy online, but it's not clear how easy it is to get a quote online for other business insurance products — it appears that an agent must complete quotes for some business types. And, according to its website, you can only file a claim through an 800 number. 

Nevertheless, Allstate is a well-known insurance brand that customers across the country rely on. The company is rated A+ by AM Best and ranked fourth in JD Power's 2022 Small Business Insurance Customer Satisfaction Rankings. 

Chubb

Chubb is one of the largest insurers in the United States. Its business insurance offerings include workers’ compensation, BOP, cyber insurance, professional liability, general liability, and business umbrella. 

On the Chubb website, you’ll find a lot of useful information to help small business owners understand their insurance needs, including articles and tools such as cost estimators. You can get a quote online or through an agent and report a claim online as well.

The company ranked second in JD Power’s 2022 Small Business Insurance Customer Satisfaction Rankings. It also was given an A++ score by AM Best, which is the credit agency’s highest possible rating. 

Next Insurance

Founded in Palo Alto, California, in 2016, Next Insurance is a relative newcomer to the small business insurance market. But the company has received significant financial backing from Munich Re, one of the world’s largest multinational insurance companies. 

As it’s among a growing number of companies focused on insuretech, you might expect Next Insurance to offer an easy-to-use web experience. You probably won’t be disappointed. You can get online quotes for general liability, workers’ compensation, BOP, commercial auto, and more. You’ll also find coverage packages tailored to the typical needs of certain types of businesses such as contractors, retailers, fitness providers, and even Amazon sellers. And you can download a certificate of insurance through the website or the company’s app.

Next Insurance was not included in JD Power’s 2022 Small Business Insurance Satisfaction Rankings. However, the company has an A- rating from AM Best.

NJM

Based in New Jersey, NJM sells business insurance to customers in several mid-Atlantic states. The company offers workers’ compensation, commercial auto, commercial excess and umbrella, EPLI, cyber insurance, BOP, and a commercial package policy. 

The commercial package policy includes property coverage, liability coverage, business income insurance, inland marine, and crime coverage. It is similar to BOP, but caters to businesses with more extensive coverage needs. With NJM’s small business insurance policies, you can get a quote online or through an agent and file a claim online or by phone. 

The company has an A+ rating from AM Best. It was not included in JD Power's 2022 Small Business Insurance Satisfaction Rankings. 

Progressive

While perhaps best known for its personal auto coverage, and ubiquitous advertising mascot, Progressive offers a broad slate of business insurance. Its offerings include BOP, professional liability, general liability, workers’ compensation, cyber insurance, commercial auto, and contractors liability. The company claims to be the number one commercial auto insurer in the U.S. (based on premium), with more than 1.9 million insured vehicles. 

The Progressive website promises quotes in just a few minutes and includes a variety of resources, such as articles and FAQs, to help you understand your coverage needs. The company is also supported by a countrywide network of independent agents. You can file a claim online or by phone. 

Progressive has an A+ rating from AM Best. It was not included in the JD Power 2022 Small Business Insurance Satisfaction Rankings. 

State Farm

If you focus only on company rankings and ratings, you may be able to stop at State Farm. It was the number one ranked insurer in the JD Power 2022 Small Business Insurance Satisfaction Rankings and got an A++ from AM Best — the agency’s highest possible rating. 

State Farm offers various types of protection, including BOP, commercial auto, liability, workers’ compensation, inland marine, E&O, EPLI, key person coverage, and more. The company website’s “Small Biz Quiz” is a helpful feature designed to assist you in determining coverage needs and you can also use State Farm for your retirement plan.  

Perhaps State Farm’s only drawback is its ease of use. Quotes and policy sales are through its local agents only, and the website does not appear to offer a claim reporting feature — you have to call the company instead.

What are the different types of small business insurance?

There’s a wide range of business insurance coverages available from most insurers. A basic policy usually includes general liability, property and business interruption insurance. You may want to consider additional coverages for your policy based on your business's specific needs. 

Note that our descriptions are generalized, and some coverage differences may exist between insurance companies. You should understand precisely what your small business insurance does and doesn't cover before you buy a policy. 

General liability — Provides financial protection if your business causes injury or property damage to a third party (customer or general public).

Property insurance — Helps reimburse you if your business property, which includes owned real estate, office equipment, tools, furniture, computers, and business documents, is damaged by fire, storms, or similar incidents or is stolen and not recovered.

Business interruption — Helps reimburse lost business income if you’re forced to shut down operations due to severe weather damage, theft, or anything else covered by the policy..

Business owner’s policy (BOP) — A package of coverages including general liability, property insurance, and business interruption. These are the three coverages that most small businesses need. You typically can customize a BOP policy with other coverages, such as workers’ compensation or commercial auto. 

Workers’ compensation — Pays for medical expenses, lost wages, and rehabilitation expenses for employees who are injured or become ill on the job. If an employee is killed on the job, it typically also pays a death benefit to the family. 

Professional liability insurance — Provides financial protection for accountants, doctors, lawyers, and other professional service providers if their clients sue them for negligence. It's sometimes referred to as errors and omissions (E&O) insurance.

Employment practices liability insurance (EPLI) — Provides financial protection if current or former employees sue your business for discrimination, wrongful termination, harassment, or other issues. 

Cybersecurity insurance — Helps reimburse costs related to cyber-attacks. These costs may include recovering and replacing lost/stolen data, customer notification, and legal counsel.  

Commercial auto insurance — Covers vehicles your company owns, leases or rents, and employee drivers. 

Commercial umbrella insurance — An added layer of liability coverage that kicks in if a claim exceeds a policy’s standard liability limits. 

Directors and officers (D&O) liability insurance — Protects the personal assets of your company’s directors and officers if they’re sued by employees, vendors, investors, customers, competitors, or others.

Product liability insurance — Covers your business if its product injures (or causes other damage to) a customer or other third party. 

Key person insurance — Life insurance covering an owner, founder, or other “key person” who's instrumental in running the business. The business is the beneficiary and receives payment if that key person dies. 

Inland marine insurance — Insurance that pays out if business property you transport overland by truck, train, or other transport is damaged or stolen. 

How much small business insurance coverage do I need, and what will it cost?

The amount of coverage you need — and its cost — will vary greatly depending on the type of business you run, its size, number of employees and assets, and other factors. 

Most small businesses need general liability insurance, property insurance, and business interruption coverage. You can package these coverages into a BOP to make things easier and, in most cases, save some money. If you have employees, you'll likely also need workers’ compensation. Meanwhile, you'll need commercial auto insurance if your business owns, rents, or leases cars or trucks. 

Many insurance company websites we reviewed have coverage selection tools to help you understand your business's coverage needs. Some companies even sell packages of coverages tailored to the needs of specific types of businesses. You can also reach out to an insurance agent who sells business insurance. An agent will take the time to understand your business and match you with a policy that meets your needs. 

What does small business insurance cover?

Small business insurance provides financial protection in a variety of situations, including but not limited to:

Your business property is damaged or destroyed by fire, severe weather, or another calamity. 

Your business property is stolen and not recovered.

Your business is held responsible for a third party’s injuries or property damage. 

An employee is injured or becomes ill on the job, requires medical attention, and misses work.  

Frequently asked questions (FAQs)What is small business insurance?

Small business insurance protects a company's property (including owned real estate and equipment), other assets, and income. It also protects the business from the financial ramifications of being sued.

Who has the cheapest business insurance?

Small business insurance costs vary between companies and depending on your coverage needs. When shopping for insurance, it's a good idea to compare premiums across at least four or five companies. 

How much should I budget for business insurance?

A survey of insurance companies offering small business insurance costs can help you budget:

BOP: $57 per month or $684 per year. Workers’ compensation for a business with 3-5 employees: $56 per month or $672 per year. Commercial auto coverage: $147 per month or $1,764 per year.

Remember that these are just averages; your costs will depend on your business size and type, assets, number of employees, and other factors.

Do I need insurance as a small business owner?

Many states and municipalities require businesses to have liability, workers’ compensation, and commercial auto coverage. 

But regardless of what the law says, operating without insurance puts you at significant financial risk. You'd have to pay out of pocket for damage to or theft of your business property or if you're held liable for a third party's property damage or injury.