Best small business insurance companies December 2023

Methodology

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We narrowed our list of the best business insurers by looking at the top 11 companies, scoring them according to nine features and 220 data points. To gather data, we analyzed more than 50 primary sources. Read our full methodology here.

Show Summary

• 
  Next
  

  : Best for discounts

• 
  Hiscox
  

  : Best for making online policy changes

• 
  RLI
  

  : Best for state availability

• 
  Chubb
  

  : Best for financial longevity

Next

Hiscox

Best for making online policy changes

The Hartford

Travelers

Allstate

RLI

Best for state availability

Chubb

Best for financial longevity

Our picks at a glance

Why do small businesses need insurance?

• Meet federal and state requirements: Some states require businesses to maintain certain types of insurance. Federal law also requires your business to carry workers’ compensation, unemployment and disability insurance if it has employees.
• Protect against liability claims: General liability insurance protects your business if it faces a claim and lawsuit. These policies cover legal fees and settlements on covered claims, like property damage, personal injury or bodily injury. Depending on your industry, additional liability coverage, like for professional, cyber or contractual, may be needed to fully protect your business against the risks it faces.
• Replace lost income: When your business operations stop or slow because of a covered event (such as a fire), business income insurance helps you continue paying your operating expenses.
• Land bigger clients: Some companies work with larger clients who require errors and omissions (E&O) insurance, which covers professional mistakes your business makes that result in financial loss to the client.

What insurance coverage do small businesses need?

First, check with your state’s business insurance requirements to make sure you have the minimum coverage required by law. If you have employees, federal law requires you to carry unemployment, workers’ compensation and disability insurance.

Also, consider your business’s risks and identify which policies can protect you. Examples include:

• Data breach insurance to cover the loss of customer data
• Commercial auto insurance if you have company vehicles
• Employment practices liability insurance if you have a growing team of employees
• Professional liability insurance, or errors and omissions (E&O), if you provide advice or professional services

Is business insurance required?

It depends on where your business is located and what industry it serves. Workers’ compensation, disability and unemployment insurance are required by federal law if you have employees. If you have company vehicles, they may need to meet state minimum auto insurance coverage requirements. Some states — but not all — require certain service providers, such as real estate agents, to carry malpractice or errors and omissions insurance.

What does small business insurance cover?

Coverage varies based on the type of policy you choose. For example, general liability insurance offers financial compensation for covered events such as bodily injury, property damage, medical expenses, libel and slander, legal defense and judgments or settlements. But general liability only provides third-party protection, so if you want coverage for your employees’ injuries, for example, then you’ll need workers’ compensation.

What does small business insurance not cover?

Every small business insurance policy will have its exclusions. For instance, a basic business liability insurance policy only covers events that cause bodily injury and property damage to third parties. Risks that require additional policies include:

• Company vehicles
• Business interruptions
• Professional liability
• Workers’ compensation
• Contractual services

Remember that insurance policies typically only cover the individuals or positions listed. As you grow and expand your team, you may need to update your policies to reflect those changes and make sure you have the proper coverage in place.

For instance, a commercial auto insurance policy will define how many vehicles and employees are covered. If you add extra cars or trucks along with new employees to your company, you need to notify your insurer.

How much small business insurance coverage do I need?

It depends on the size of your company and the risks associated with your operations. General liability coverage usually applies to all types of businesses, while specialized add-on recommendations vary by company.

For instance, a trucking company with a fleet of vehicles and drivers has a different set of risks compared to an independent consultant.

New businesses without substantial revenue may want to start with a general liability policy (as long as you meet all federal and state requirements). As your revenue grows, you can expand your policy to mirror that increased risk of earning more and holding more assets.

How much does small business insurance cost?

The cost of small business insurance varies based on the coverage and specific type of policy you choose. One study shows that small businesses pay an average of $42 per month for general liability insurance, according to business insurance marketplace Insureon.

A business owners policy (BOP) may cost more than a stand-alone general liability policy, but it typically combines three types of coverage: general liability, commercial property and business interruption (or business income). For some businesses, this may be a more cost-effective option than obtaining separate policies.

The average cost of a BOP is $57 a month, while commercial auto insurance averages $147 a month. Workers’ compensation insurance varies depending on several factors, including the number of employees, their classification, payroll size and the company’s previous claims history.

How to choose a small business insurance company that’s right for you

Start by focusing your search on licensed insurance agents who specialize in commercial policies. While they do get paid commission, you can find reputable agents who are reliable and can help you assess your risks and choose the right policies.

That doesn’t mean you have to stick to one insurance agent. Online marketplaces that offer multiple quotes at once are a good way to comparison shop. Also, you don’t have to be locked into one insurer and policy forever. Reassess your policies, coverage and premiums each year to help ensure they meet your needs and budget.

Methodology

To find the best small business insurers, we looked at data from 28 companies and narrowed the group down to the top 11 insurers. From there, we looked at nine categories and 220 data points to select the best companies in each category.

Online claims, quotes and policy changes (30%)

Online tools make insurance purchases and housekeeping much easier for small businesses. Therefore, we rated companies that offered online claims, quotes and policy changes higher than those that didn’t or that offered them with limitations.

State availability (25%)

Not all insurance companies operate in all states. Some policyholders prefer working with national insurers, while others prefer working with ones that only work in their regions. Having access to adequate coverage is an important first step when analyzing insurance companies. For this category, we researched how many states each insurer operates in.

J.D. Power score (14%)

J.D. Power scores insurance providers based on five factors that are a key part of the customer experience: billing and payment, claims, interaction, policy offerings and price. We include J.D. Power ratings in our scores because they help you gauge what an insurer’s typical customer experience is like.

Discounts (10%)

Companies that provide discounts for small business owners received higher scores than those that didn’t have discounts or could not provide information about any discounts they may offer.

Online certificate of insurance (10%)

Insurers that offer online certificates of insurance (COI), which is a helpful feature for businesses with clients that request proof of insurance, received higher scores than those that didn’t.

AM Best rating (6%)

AM Best is a well-respected independent credit rating agency that evaluates insurance companies’ financial strength. By analyzing insurers’ balance sheets, risk management, operating performance and other factors, AM Best assigns a financial strength rating (FSR) based on the insurers’ abilities to pay out on claims and cover other obligations.

NAIC complaint index (5%)

The National Association of Insurance Commissioners (NAIC) calculates an index for insurance companies based on the company’s share of premiums and complaints filed with the NAIC. An index of 1.00 indicates the insurer received the expected number of complaints for a company of its size. An index below 1.00 means the company received fewer complaints than expected for a company of its size and vice versa. We calculated each company’s score by averaging its 2022 indices for its commercial property, commercial liability and commercial auto policies.

What didn’t make the cut

Of the 11 small business insurance companies we analyzed for our final rankings, four did not make it into our top picks. Three insurers — biBERK, CNA and THREE — didn’t meet the minimum score of 3 stars. One insurer, Liberty Mutual, met the minimum score requirement but was not included in our winners list because it didn’t stand out enough in any facet of our scoring to win a category.

Frequently asked questions (FAQs)

Do I need small business insurance?

Legally, it may be required. But even if not, it’s wise to have some type of small business insurance regardless of your company’s size, as many states have basic coverage requirements for businesses. It can protect your business from lawsuits, natural disasters and accidents. Look at your risks and decide which business areas need a layer of financial protection to help determine what types of business insurance are appropriate.

Do you need a business owners policy?

A business owners policy (BOP) combines commercial property, general liability and business interruption insurance. It’s a good fit if your business includes a physical location or tangible assets that need protection in the event of a covered loss. On top of protecting property, a BOP can also protect against lawsuits or liability if a client is injured on your premises or by one of your products.

Do I need business insurance for an LLC?

If your LLC has employees, you’ll need workers’ compensation insurance. Beyond that, general liability coverage is important if your LLC can’t survive a costly legal claim related to third-party bodily injury or property damage. For solo LLC operators who provide a service to clients, consider professional liability insurance to cover lawsuits from clients and competitors due to errors, negligence or omissions. Ultimately, the best business insurance for LLCs depends on your business’s structure and size.

Do I need small business insurance if I work from home?

If you’re an employee working remotely on behalf of a company, you don’t need your own small business insurance policy. However, employers should carry general liability insurance to cover any incidents that happen to remote employees while working from home.

If you’re a freelancer working from your home, consider getting a business owners policy, which offers commercial protection that’s usually excluded from your homeowners insurance policy.

Do I need small business insurance if I don’t have employees?

When you’re the only person in the business, you don’t need employee-related policies like workers’ compensation or disability insurance. However, other policies may be beneficial, such as general liability insurance.

What are the top reasons for having business insurance?

Business insurance is a layer of financial protection for your business. If a covered event affects your business, such as a lawsuit or natural disaster, business insurance can help cover the costs. Covered costs often include legal fees or property damage repairs.