If you have a small business, you've likely seen higher costs across the board, from the products you buy to the services you depend on to keep systems running.
Insurance policies haven't been exempt from the increase in costs, either — liability insurance rates have jumped year over year, according to insurance news site Business Insurance. However, having the right coverage in place is critical: It can shield you from liability if you're sued and, if you have employees, provide workers' compensation.
CNBC Select picked the best companies for small business insurance, based on affordability, coverage options and availability, customer satisfaction and other criteria. (See our methodology for more information on how we chose the best small business insurance.)
Best small business insurance
Protect your business with the right coverage
Best for variety: State Farm
Who's this for? State Farm has a wide variety of small business coverages available, from business owner's policies (BOP) to commercial auto insurance.
Standout benefits: Equipment breakdown coverage is included in a BOP from State Farm. In addition to standard policies, State Farm offers artisan insurance, builder's risk policies, farm and ranch insurance and inland marine insurance.
- Covers a wide variety of small businesses, from veterinary practices to retail storefronts
- Business coverages can include BOPs, commercial auto insurance, farm and ranch coverage and worker's compensation.
- Online quotes only available in Wisconsin, Texas, Colorado and California
- Above average NAIC complaint index
Best for plan variety: Nationwide
Who's this for? Nationwide has coverage options for an array of industries, including food service, retail, auto repair, photographers, wholesalers and consulting offices.
Standout benefits: Nationwide offers accounts receivable coverage, which protects against losses if your customer fails to pay. Additionally, professional liability coverage is available for part-timers and freelancers who work less than 26 hours per week and generate less than $250,000.
- Covers a variety of industries including food service, retail, auto repair, photographers, wholesalers and consulting offices.
- Offers accounts receivable coverage, which protects against losses if your customer fails to pay.
- App doesn't support business policy management
Best for commercial auto insurance: Progressive
Who's this for? Progressive has policies for a wide range of vehicles, including specialized coverage for food trucks, dump trucks and auto hauling trailers.
Standout benefits: Progressive's Snapshot ProView plan offers complimentary fleet management tools, which is useful for keeping track of your employees and vehicles on the road.
- Offers business insurance in 49 states and a variety of types of insurance in dozens of industries
- Below average complaint index by the NAIC
- Not a top 10 pick for customer satisfaction per JD Power commercial insurance study
Best for home-based businesses: The Hartford
Who's this for? The Hartford is a good fit if you run your business from home since it offers a specialized home-based business option that can cover property damage, lost income, legal fees and more. You can also easily add professional liability and cyber coverage to your policy.
Standout benefits: Bundling a BOP with workers' compensation can save you up to 10%. BOP insurance can be customized with coverage for professional liability, data breaches and off-premises utility service.
- Home-based small business owners can get coverage for property damage, lost income and legal fees
- Professional liability insurance and cyber coverage are available
- BOPs include business income coverage
- Quotes are available easily online, making it possible to shop for coverage
- App doesn't support business policy management
Best for independent contractors: Hiscox
Who's this for? Hiscox is a great choice if you're flying solo, as it offers BOP insurance tailor-made for contractors and freelancers.
Standout benefits: Hiscox lets you pay premiums monthly at no extra charge, a big plus if your cash flow is tight. Plus, premiums start at just $22.50 per month.
- Offers directors and officers (D&O) liability insurance, an option not available with every insurer
- Short-term liability insurance available for small businesses, as well as BOP insurance for contractors and freelancers
- Policies start at $22.50 a month, making them a good fit for those wanting affordable coverage
- Not available in Alaska
Best for business owners' policies: Chubb
Who's this for? Chubb issues BOPs for companies with up to $30 million in revenue and offers options for unique circumstances, including environmental insurance and management liability coverage.
Standout benefits: Chubb BOPs can be customized to include workers' compensation, cyber risk management, electronic data liability and other add-ons.
- Businesses with up to $30 million in revenue are eligible
- Offers BOP, commercial auto insurance, workers compensation and umbrella insurance
- Has niche coverages not available from all insurers, including environmental insurance and management liability coverage
- Certificates of insurance must be requested
Best for customer satisfaction: Travelers
Who's this for? Travelers boasts high ratings from J.D. Power's small business insurance study, ranking fifth among more than 15 companies reviewed. It also has few complaints with the National Association of Insurance Commissioners for commercial liability, property and auto policies for a company of its size.
Standout benefits: The brand also offers an equipment breakdown coverage option, which can help get your business back on track after a malfunction.
- Offers equipment breakdown coverage
- High ratings from J.D. Power's small business insurance study
- Policies issued and endorsements processed quickly
- Online quotes aren't available for business policies
What does business insurance cover?
Business insurance covers commercial entities from financial losses associated with unexpected events, including property damage, business interruption, employee injuries, lawsuits, thefts and data breaches.
One of the most common types of insurance is a business owner's policy, which combines a variety of coverages into one policy.
- General liability insurance: Protects your liability in lawsuits filed by others, like bodily injury or property damage. It also covers personal injury, like slander or libel.
- Commercial property insurance: Covers buildings and equipment used to run your business, whether owned or rented.
- Business interruption insurance: Allows you to meet payroll, cover rent and pay other expenses if your business is shut down because of a covered event.
- Professional liability insurance: Also known as errors and omissions (E&O) insurance, this covers negligence and inaccurate statements not covered by general liability insurance.
- Workers' compensation insurance: If your employee is hurt or gets sick as a result of their job, this can cover medical bills, lost wages, ongoing care and even funeral costs. Most states require businesses with employees to have this type of insurance.
- Commercial auto insurance: Covers any vehicles your business owns against bodily injury and property damage you're held liable for to others.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Geico auto coverage is available in all 50 states and Washington, D.C., with 16 discounts and add-ons like roadside assistance, rental car reimbursement and mechanical breakdown insurance.
Progressive offers an array of riders, including rideshare insurance and a Deductible Savings Bank that deducts $50 each policy period you go without a claim. It also offers mechanical breakdown insurance, which covers unexpected major system failures.
- Data breach insurance: Pays for costs associated with a data breach, including investigation, credit monitoring, notification of impacted individuals and public relations. Larger companies may have cyber liability insurance, which can provide coverage in the event of a lawsuit resulting from a cyberattack.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Plans from $10 to $32 per month, billed annually
Protects against identity theft, fraud, spam calls and websites, viruses and malware. Offers three-credit-bureau monitoring, VPN, dark web monitoring, password manager, email aliases and instant credit lock.
On Aura's site
From $7.50 to $25.00 per month, billed annually on individual plans and $12.50 to $33.33 per month, billed annually on family plans
Up to $1 million in insurance for eligible losses from identity theft
On Identity Guard's site
- Equipment breakdown insurance: Covers the cost to repair or replace equipment that has stopped functioning as a result of a sudden mechanical or electrical malfunction, including mechanical, electrical, AC/refrigeration, computers and phones. However, normal wear and tear is not covered. Equipment breakdown insurance also pays for lost income and wasted inventory.
- Business umbrella insurance: Supplements existing coverage of certain liability policies if repairs, medical bills, legal fees, settlements or other costs exceed your policy's limits.
How much does small business insurance cost?
Costs for business insurance vary greatly, depending on the kind of policy you're buying, the type of work you do, and your location.
In April, the average cost of a general liability policy purchased through insurance marketplace Insureon was $45 a month or $538 per year. The average rate for a BOP was $83 a month or $990 per year.
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Small business insurance FAQs
Do I need business insurance if I operate out of my house?
A homeowner's policy typically only provides $2,500 in coverage for business equipment and it doesn't include liability or lost income. In many cases, having a separate commercial policy is the only way to be fully protected.
Do you need liability insurance to run a business?
General liability insurance is not required by law but clients, suppliers and business partners may require it in order to sign a contract. It's intended to cover claims if your business is held responsible for injuries or property damage.
What doesn't small business insurance cover?
Exclusions depend on the type of policy. However, most business insurance policies exclude damage from normal wear and tear, flooding or earthquakes. In addition, fraud, criminal acts and intentional damage.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every business insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. To research the best insurance companies, we compiled over 100 data points across more than a dozen insurers. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Our methodology
To find the best business insurance companies, CNBC Select collected hundreds of data points on more than a dozen companies offering business insurance.
When narrowing down and ranking the best providers for business insurance for small companies, we considered affordability, types of coverage sold, the variety of industries insured, availability and customer service.
We reviewed customer satisfaction ratings from J.D. Power, the National Association of Insurance Commissioners and the Better Business Bureau and considered A.M. Best's financial strength ratings, which measure an insurance company's ability to pay on debts.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Based on these criteria, our picks for the best small business insurance are:
- Best for variety: State Farm
- Best for plan variety: Nationwide
- Best for commercial auto insurance: Progressive
- Best for home-based businesses: The Hartford
- Best for independent contractors: Hiscox
- Best for business owners' policies: Chubb
- Best for customer satisfaction: Travelers
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