6 Most Expensive States for Business Insurance

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Contributor, Benzinga
August 18, 2022

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The cost of business insurance varies from state to state, making certain states much more expensive than others. While business insurance can be expensive, going without it can cost you more in the long run. A lot more. Learn everything you need to know about business insurance with Benzinga’s guide to business insurance costs by state.

The 6 Most Expensive States for Business Insurance

When it comes to business insurance, there are many different factors that may impact the cost of your coverage. One of the biggest: location. For example, a business operating out of Florida may be subject to risk from tropical storm damage, which could lead to pricer premiums than a similar business in Montana.

Whether it’s an all-inclusive business owner’s policy or business liability insurance, here’s a list of the most expensive states to insure your business in.     

No. 1 Texas

The Lone Star State is the most expensive state for business insurance. The average annual premium for businesses in Texas is $708 — that’s a big chunk of change. However, Texas is one of the few states that only requires a single type of business insurance: a policy covering any vehicles that the business owns. While the average payment comes to around $59 a month, this can vary greatly depending on a few different factors, including your industry, number of employees and where in Texas your business is located.   

No. 2 Florida

Florida is the second most expensive state for business insurance, with an average annual premium of $698. While the minimum insurance requirements in Florida only relate to commercial auto and workers’ compensation, smaller businesses will typically need between $500,000 and $1 million in coverage. While average payment comes to $58 a month statewide, your premium will vary based on where in Florida you do business. For example, if you do business on the coast, your insurance will be more expensive than someone who operates in the north part of the state. 

No. 3 Colorado

Third on the list of the most expensive states for business insurance is Colorado. The average annual premium in the Centennial state is around $636, which brings monthly premiums to around $53. Colorado requires businesses to carry both workers’ compensation and commercial auto insurance, but even a basic business insurance policy can help protect your company from the unexpected. 

No. 4 Utah

Utah landsat No. 4, with an annual average premium of $576. Similar to Colorado and Florida,  the minimum business insurance requirements in Utah involve commercial auto insurance and workers’ compensation. While the average monthly payment lands at around $48, your actual premiums may vary depending on where in Utah you operating.

No. 5 Alabama

While Alabama may be a “sweet home,” it’s also an expensive one for business insurance, with average annual premiums of $564. Don’t even think about operating your business without the minimum required workers’ compensation and commercial auto insurance, which price out at an average monthly payment of $47.

No. 6 Oregon

Technically, Oregon and Alabama are tied when it comes to their annual average premium and average monthly payment, so they’re equivalent when it comes to business insurance expenses. Just like Alabama, the average annual premium is $564, and the monthly payment comes to around $47 for the majority of businesses operating in the state. 

Risk Factors for Businesses

Several things can make a business more expensive to insure — and the riskier the business, the more you’ll spend on insurance coverage. Here are a few risk factors that insurance companies will consider when determining the overall price of your business insurance policy.

  • Type of insurance policy: A variety of types of business insurance are available, including general liability, professional liability, commercial auto and umbrella policies. As you might expect, the specific nuances of each policy will dictate the price you pay.   
  • Deductible: The cost of your deductible typically depends on your premium. As you might expect, the lower the deductible, the higher the premium. While a low monthly price for business insurance may sound attractive, a high deductible means you’ll end up paying more out of pocket when disaster strikes. 
  • The size of your business: This insurance factor is pretty easy to understand. If you’ve got a big business with lots of employees, cars and property, you’ll end up paying more than your smaller competitors because insuring your business comes with more risk of a claim. 
  • Location, location, location: Much like average costs vary from state to state, they can also vary from town to town. For example, a business operating out of Dallas will have far different insurance costs than those doing business in a smaller, more rural part of Texas.
  • Industry and unique risks: Finally, your specific industry is a huge factor when it comes to your premiums. Running a construction company, for example, carries very different risks than operating a bookstore. As you might expect, the precise nature of your business is a major factor in the overall cost of your business insurance.   

Does Your Business Need Workers’ Compensation Insurance?

It might. Workers’ compensation is a type of insurance coverage that compensates your employees for any medical bills they incur after hurting themselves at work. The amount of workers’ compensation coverage you must purchase as an employer varies depending on where you operate and the nature of your business. In some states, you must purchase workers’ compensation insurance as soon as you hire your first employee. In other states, small businesses do not need to purchase workers’ compensation insurance until they have at least five full-time employees. Consult with an insurance representative in your state who is familiar with your local laws to learn more about what type of coverage you need to be within the bounds of the law.

The exception to this rule is if you own a sole proprietorship or a partnership that does not have any employees. So long as you don’t hire any full-time or part-time employees, your business does not need to have workers’ compensation insurance. 

Types of Business Insurance Your Company Needs

There are many types of insurance that you might need to protect your business. Some of the most common types of coverage that small-business owners purchase include:

  • General liability: General liability coverage helps defend your business if a customer or client sues you after they’re injured or you damage their property. Your general liability coverage can also help pay court costs and judgements if another business owner sues you for slander, defamation or copyright infringement.
  • Property damage: Commercial property damage compensates you for any physical damage done to the property where you conduct business. It is similar to the homeowners insurance used to protect your personal property.
  • Business owner’s policy: A business owner’s policy (BOP) combines general liability and commercial property damage insurance with a single premium.
  • Errors and omissions: Errors and omissions coverage, sometimes referred to as professional liability insurance, protects service professionals. This coverage helps you pay for legal expenses if a client or customer sues you for negligence or errors in the services you provide as part of your business.

The specific coverages your business needs will vary depending on the specifics of your work. 

Compare Business Insurance 

Choosing the right company to provide your business insurance can help you rest easy at knowing that you’re protected. Benzinga offers insights and reviews on the following business insurance providers. Consider beginning your search for coverage with a few of the links below. 

Frequently Asked Questions


What are four types of business insurance?


Four common types of business insurance are general liability, commercial property, business income and professional liability. Each type of insurance offers a different type of protection, and your business likely will require multiple types of insurance coverage to stay fully protected.


Why do you need business insurance?


Putting aside legal requirements, you need business insurance to help cover the costs of the unexpected. Business insurance can help pay for costs related to liability claims or property damage — either of which can be financially devastating.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.