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The honest answer is that a new business pays less than an established one doing the same work. Premiums scale with revenue and headcount, and a first-year business has little of either, so a startup lands at the low end of every range below. The catch: new businesses are the ones signing leases that want a certificate first.
How much is business insurance for a new business?
A solo owner pays about $27–$47 a month for general liability, $35–$61 for professional liability and $50–$86 for a business owner’s policy. Two to five people pays about $34–$58, $44–$77 and $62–$108. These are the all-trades middle: a consultancy sits below, a contractor well above.
| Coverage | Typical monthly | Typical annual | What it covers |
|---|---|---|---|
| General liability ($1M per occurrence) | $34–$58/mo | $405–$702/yr | Injury and damage to others; what a landlord names. |
| Professional liability (E&O) | $44–$77/mo | $531–$920/yr | Financial loss a client suffers from your advice. |
| Business owner’s policy (BOP) | $62–$108/mo | $747–$1,295/yr | General liability plus cover on equipment and stock. |
| Hiscox advertised starting price | from $22.50/mo | from $270/yr | E&O from $22.50, general liability from about $29, a BOP from about $42. |
Our general liability vs professional liability vs BOP guide explains which policy answers which claim, and trade-by-trade figures sit in how much small business insurance costs.
What a new business needs in year one, in order
Buying everything at once is how a startup overspends. General liability first, because contracts, landlords and marketplaces ask for it and it is the cheapest of the three. Professional liability second if you sell advice or a service, since general liability says nothing about the quality of your work. A BOP once you own equipment or stock, when bundling beats buying both apart. Workers’ compensation the day you hire, required in almost every state and priced on payroll.
Startup insurance cost by business size
Headcount is the clearest signal an insurer has about scale, and a first-year business sits in the first two rows.
| Business size | General liability | Professional liability | BOP |
|---|---|---|---|
| Just me | $27–$47/mo | $35–$61/mo | $50–$86/mo |
| 2–5 people | $34–$58/mo | $44–$77/mo | $62–$108/mo |
| 6–20 people | $52–$91/mo | $69–$119/mo | $96–$167/mo |
| 21–50 people | $81–$140/mo | $106–$184/mo | $149–$259/mo |
| 51+ people | $122–$211/mo | $159–$276/mo | $224–$388/mo |
Startup insurance cost by state
The same new business pays roughly twice as much in Florida or Louisiana as in Iowa or North Dakota, because litigation, jury awards, weather losses and state rules all feed the rate.
| State | General liability monthly | General liability annual |
|---|---|---|
| Florida | $53–$91/mo | $630–$1,092/yr |
| Louisiana | $53–$91/mo | $630–$1,092/yr |
| California | $47–$81/mo | $563–$975/yr |
| New York | $47–$81/mo | $563–$975/yr |
| Texas | $41–$71/mo | $495–$858/yr |
| Illinois | $41–$71/mo | $495–$858/yr |
| Colorado | $37–$65/mo | $450–$780/yr |
| Washington | $37–$65/mo | $450–$780/yr |
| New Jersey | $37–$65/mo | $450–$780/yr |
| Massachusetts | $37–$65/mo | $450–$780/yr |
| Georgia | $34–$58/mo | $405–$702/yr |
| Arizona | $34–$58/mo | $405–$702/yr |
| North Carolina | $34–$58/mo | $405–$702/yr |
| Nevada | $34–$58/mo | $405–$702/yr |
| Ohio | $31–$54/mo | $373–$647/yr |
| Pennsylvania | $31–$54/mo | $373–$647/yr |
| Michigan | $31–$54/mo | $373–$647/yr |
| Virginia | $31–$54/mo | $373–$647/yr |
| Tennessee | $31–$54/mo | $373–$647/yr |
| Alabama | $27–$47/mo | $324–$562/yr |
| Kansas | $27–$47/mo | $324–$562/yr |
| Oklahoma | $27–$47/mo | $324–$562/yr |
| Wisconsin | $27–$47/mo | $324–$562/yr |
| Kentucky | $27–$47/mo | $324–$562/yr |
| Iowa | $26–$44/mo | $306–$531/yr |
| North Dakota | $26–$44/mo | $306–$531/yr |
All fifty states, for every trade and all three policies, are in our guide to average business insurance cost by state.
Startup insurance cost by limit
Limits are a per-occurrence figure over an annual aggregate, and $1M/$2M is what nearly every contract names. Dropping to $500K saves about ten dollars a month and fails the first certificate check. More in our guide to $1 million liability insurance cost.
| Limit | Typical monthly | Typical annual |
|---|---|---|
| $500K / $1M aggregate | $24–$42/mo | $292–$505/yr |
| $1M / $2M aggregate (standard) | $34–$58/mo | $405–$702/yr |
| $2M / $4M aggregate | $44–$76/mo | $526–$913/yr |
| $1M plus a $1M umbrella | $79–$137/mo | $952–$1,650/yr |
An LLC does not do what most founders think
The commonest reason a new owner skips insurance is forming an LLC and believing the problem is solved. The structure separates your personal assets from the company’s debts, so if the business fails owing money, creditors generally cannot take your house. That is all it does. It does not pay a claim, appoint a lawyer or stop anyone suing the company, where your assets and income sit. Insurance pays the defence and the settlement. Sole proprietors have the same need with one layer fewer.
How insurers price a business with no history
An insurer normally rates on last year’s revenue, payroll and claims. A startup has none, so the quote is built on projected revenue, the trade class you pick and the owner’s experience. No claims history is neutral rather than bad. Here is the trap: founders quote the revenue they hope for, the premium is set on it, and they pay all year. Give a realistic figure and say so if you outgrow it, since mid-term adjustments are routine.
When to buy, and why after is too late
Buy before the first client contract or lease, not after. A policy responds to claims arising from the date cover starts, so buying the week after an incident does nothing, and landlords want the certificate before you take the keys. Quote while you negotiate and start cover the day the agreement does.
How to get the cheapest honest quote
- Quote real first-year revenue. Insuring the business you hope to be is the biggest startup overpayment.
- Pick the trade class that matches the work. A consultancy priced as a contractor pays double for nothing.
- Start with one policy. General liability at $1M/$2M, then add the rest when the need is real.
- Pay annually. Instalments usually carry a fee.
- Do not drop limits to save ten dollars. A rejected certificate costs you the contract.
- Re-quote at twelve months. A real trading year with no claims makes year two negotiable.
Where these numbers come from
Every range starts from the national monthly averages we use site-wide: $45 for general liability, $59 for professional liability, $83 for a BOP. Those sit at a trade multiplier of 1.00, our calculator’s default when a business fits no listed class, then scale by size, state and limit. Our small business insurance cost calculator runs the same arithmetic, and each range spans a 0.75 to 1.30 carrier spread.
Hiscox and new businesses
Hiscox quotes new businesses online, including first-year sole proprietors and single-member LLCs, in about five minutes. It advertises professional liability from $22.50 a month, general liability from about $29 and a BOP from about $42, close to where a low-hazard startup with modest projected revenue lands. You choose limits inside the quote. If your new business keeps books, see our bookkeeper insurance cost guide.
Why Hiscox
Hiscox is built for small, service-based businesses, with an A (Excellent) rating from AM Best and online quotes in minutes. Available in 49 states plus DC, not Alaska.
Frequently asked questions
How much is business insurance for a new business?
A brand-new solo business pays about $27–$47 a month for general liability, $35–$61 for professional liability (E&O) and $50–$86 for a business owner’s policy. A new business of two to five people pays about $34–$58, $44–$77 and $62–$108. First-year businesses usually land at the low end of every range, because premiums scale with revenue and headcount.
Does an LLC need business insurance?
Yes, and for a reason people often miss. An LLC separates your personal assets from the company’s debts. It does not pay a claim, hire a lawyer or stop anyone suing the company itself, where your business assets and income sit. Insurance pays the defence and the settlement, and a landlord or client asks for a certificate whatever your structure.
Do sole proprietors need business insurance?
A sole proprietor has more reason to carry it, not less, because nothing separates the business from your personal assets. A claim against the business is a claim against you. General liability at $1M/$2M limits is the usual start, about $27–$47 a month solo, with professional liability added if you sell advice.
When should a new business buy insurance?
Before the first client contract or lease, not after. A policy covers claims arising from the date it starts, so cover bought after an incident does nothing about it, and most contracts and leases want a certificate before you begin work. Workers’ compensation is separate: it is required from the day you hire your first employee in almost every state.
What is the cheapest insurance for a startup?
General liability at $1M/$2M limits, about $27–$47 a month solo, or professional liability at about $35–$61 if you sell advice rather than a product. Hiscox advertises E&O from $22.50 and general liability from about $29. The cheapest honest quote comes from reporting real first-year revenue, picking the right trade class and paying annually.
Do I have to buy through you?
No. This site publishes cost guides and earns a commission if you get a quote through a partner link. We are not an insurer or a broker, we do not sell your details, and a quote costs you nothing and commits you to nothing.
Disclaimer: Informational only, not insurance advice or a substitute for a licensed agent. Registration and workers’ compensation rules change by state; confirm current requirements before relying on them. Coverage descriptions are summaries; policy terms govern. Prices are illustrative and vary by state and business. Hiscox is available in 49 states and DC, not Alaska.