How Much Does Insurance Cost For Machine Shops? 2025 Rates

U.S. machine shops can expect to pay between $540 and $720 annually for comprehensive business insurance, averaging $45 to $60 per month. The primary cost drivers are business size, location, equipment value, number of employees, types of services offered, safety measures, coverage limits, and policy deductibles.

How Much Does Machine Shop Insurance Cost?

The average machine shop in the U.S. might pay around $540 to $720 per year for a full business insurance package, or about $45 to $60 per month. But this is just an estimate, actual costs can be very different based on your shop’s unique needs.

A small shop with a few tools and no employees will likely pay less than a large shop with expensive machinery and many workers.

Things like the type of work you do, your shop’s location, how many employees you have, the value of your equipment, and your safety record all affect your business insurance cost. For example, shops in high-crime areas or those doing high-risk work like welding may pay more.

Here are some of the biggest cost drivers:

• Number of employees (affects workers’ comp and liability)
• Property size and value (affects commercial property coverage)
• Past claims history (insurers charge more if you’ve filed claims)
• Business interruption coverage and other add-ons

Understanding these variables can help you better estimate your insurance needs and prepare for the real costs of protecting your machine shop.

Average Machine Shop Insurance Costs For Coverage Types

When it comes to protecting your machine shop, different types of insurance cover different risks. Understanding the average cost, coverage details, and what influences pricing for each policy type can help you build a more effective insurance plan. Here’s a closer look at the major coverages most machine shops need.

• General liability insurance: $45 per month
• Business owner’s policy: $120 per month
• Workers’ compensation insurance: $149 per month
• Commercial auto insurance: $249 per month
• Commercial property insurance: $150 per month
• Commercial umbrella / excess liability insurance: $96 per month

General Liability Insurance

The average cost of general liability insurance for a machine shop is about $45 per month.

General liability covers third-party bodily injury, property damage, and advertising injuries. For example, if a delivery person walks into your machine shop and trips over an extension cord, injuring their leg, general liability insurance would help cover their medical bills and any legal costs if they decide to sue.

Typical policy limits are $1 million per occurrence and $2 million aggregate.

Factors that influence the cost include the business size, location, customer traffic volume, and previous claims history.

Here’s a look at the average annual premiums for 10 different states:

Note: These estimates are based on average annual premiums for machine shop businesses, compiled from both national carriers and regional insurance agencies. They reflect typical coverage limits for small-to-medium operations, considering risks such as equipment use, employee injury, property damage, and liability tied to manufacturing processes. Actual premiums will vary depending on shop size, number of employees, claims history, type of machinery used, and whether additional coverages (like Workers’ Compensation or Product Liability) are bundled with General Liability.

Business Owner’s Policy (BOP)

The average cost of a business owner’s policy (BOP) is about $120 per month for a machine shop.

A BOP bundles general liability insurance with commercial property insurance. It protects against customer injuries, property damage, and loss or damage to the property or equipment. For example, if a fire breaks out in your machine shop and damages your machines, tools, and part of the building, the BOP would help pay for repairs to the building and replace the damaged equipment. It would also cover costs if a customer is injured on your property during the incident.

Typical policy limits are $1 million per occurrence and $2 million aggregate for liability, with separate property coverage limits based on the value insured.

Cost factors include the machine shop’s property value, location risk (such as flood or crime rates), business revenue, number of employees, and any optional endorsements like business interruption insurance.

Here’s a look at the average annual premiums for 10 different states:

Note: These estimates reflect average Business Owner’s Policy (BOP) premiums for machine shop businesses, which typically combine general liability and commercial property coverage. Figures account for industry-specific risks such as equipment damage, fire hazards from machinery, employee injury, and property coverage for tools and shop facilities. Actual premiums will vary depending on shop size, number of employees, services offered, location, coverage limits, and claims history.

Workers’ Compensation Insurance

The average cost of workers’ compensation insurance for a machine shop is around $149 per month.

Workers’ comp covers medical bills, rehabilitation, and lost wages for employees injured on the job. If a machinist accidentally cuts their hand while operating a machine and needs medical treatment, workers’ compensation insurance would cover their hospital bills and a portion of their lost wages while they recover and are unable to work.

Policy limits are regulated by each state, but typically include medical costs and a percentage of lost wages without a set cap.

Premiums are influenced by the size of your payroll, the type of work employees perform , your claims history, and any implemented safety programs.

Here’s a look at the average annual premiums for 10 different states:

Note: These estimates are based on average annual Workers’ Compensation premiums for machine shop businesses, incorporating state-specific base rates, employee classifications, and payroll ranges typical of both small independent shops and larger industrial operations. Actual premiums will vary depending on your shop’s size, claims history, number of employees, and insurer underwriting practices.

Commercial Auto Insurance

The average cost of commercial auto insurance for a machine shop is about $249 per month.

Commercial auto insurance covers vehicles owned or used by the business for accidents, theft, vandalism, or damage. For example, if your machine shop uses a company-owned van to deliver finished parts to clients and the driver gets into an accident, commercial auto insurance would cover the repair costs for the van, any damage to the other vehicle involved, and medical expenses if someone is injured.

Factors influencing the cost include the number and type of vehicles, how often they are used, the driving records of employees, whether deliveries are local or long-distance, and whether you add endorsements like hired and non-owned auto insurance (HNOA) for employee-owned vehicles used for deliveries.

Here’s a look at the average annual premiums for 10 different states:

Note: These estimates reflect average annual premiums for machine shop businesses that operate service vans, pickup trucks, or small box trucks used for transporting tools, fabricated parts, and raw materials. Rates are based on blended averages from both small and large agencies, incorporating regional risk exposure, liability coverage levels, and vehicle usage patterns unique to manufacturing operations. Actual premiums will vary depending on shop size, fleet composition, driving history, and insurer underwriting practices.

Commercial Umbrella Insurance

The average cost of commercial umbrella insurance for a machine shop is about $96 per month.

Commercial umbrella insurance is extra protection that goes beyond the limits of your regular business insurance policies, like general liability or commercial auto insurance. For example, if a customer is seriously injured in your machine shop and sues you for $2 million, but your general liability policy only covers $1 million, commercial umbrella insurance would step in to cover the remaining $1 million, helping protect your business from paying out of pocket.

Umbrella insurance is usually sold in amounts of $1 million at a time. The more coverage you choose, the more it will cost.

Here’s a look at the average annual premiums for 10 different states:

Note: These estimates reflect average annual premiums for Commercial Umbrella insurance tailored to machine shop operations, based on aggregated data from both small and large insurance agencies. Figures account for location-specific liability exposures, equipment-heavy environments, employee count, and claims history. Actual premiums will vary depending on your shop’s unique profile, coverage limits, and insurer underwriting criteria.

Machine Shop Business Insurance Costs By Provider

Machine shop business insurance costs will vary greatly depending on the insurance carrier. Use the table below to find average costs across different providers.

Note: These estimates are based on average annual premiums for machine shop businesses, considering both small and large agencies. Coverage typically includes general liability, workers’ compensation, commercial property, equipment breakdown, and product liability insurance. Actual premiums will vary depending on shop size, number of employees, equipment value, services offered (e.g., fabrication, repair, precision machining), claims history, and coverage limits.

What Factors Impact Your Machine Shop Insurance Costs?

Machine shop insurance premiums are carefully calculated by underwriters based on your business’s risk profile. Things like the type of work you do, where your shop is located, the value of your equipment, how many claims you’ve had in the past, and your safety practices all play a role in deciding how much you’ll pay for coverage.

Type Of Machine Shop

Shops that do heavy-duty work like welding or CNC machining usually pay more than small repair or assembly shops. Riskier work means higher insurance.

Use Of Hazardous Materials Or Chemicals

If your shop uses oils, solvents, or flammable materials, that increases your fire and health risks, which can raise your premiums.

Location

Shops in areas with high crime, flooding, or in busy urban zones may pay more for coverage. If you’re in a low-risk, quiet area, your insurance could be cheaper.

Size Of Your Operation

A bigger shop with more machines, employees, or clients has a higher chance of accidents or claims. That usually means higher insurance costs.

Value Of Property And Equipment

If your shop has expensive machinery like CNC mills, lathes, or custom tools, your commercial property insurance will cost more. Many shops also add coverage for equipment breakdown or business interruption.

Optional Coverage

Extra add-ons like cyber insurance, business interruption, or coverage for rented vehicles can be helpful, especially if you take online orders, depend on deliveries, or rely heavily on your machines, but they will raise your premium.

How To Lower Your Machine Shop Insurance Costs

Running a machine shop can be expensive, but your insurance bill doesn’t have to break the bank. While you can’t eliminate the need for coverage, you can take smart steps to reduce your premiums without sacrificing protection. Here are some practical ways to lower your machine shop insurance costs:

1. Bundle Your Policies

One of the easiest ways to save is by bundling multiple policies. Most insurers offer a Business Owner’s Policy (BOP) that combines general liability and property insurance at a lower rate than if you bought them separately. If you also need workers’ compensation, bundling both through the same provider can lead to additional discounts. Not only does this simplify your paperwork, but it also makes your coverage more cost-efficient.

2. Ask About Discounts

Insurance companies often reward businesses that commit to a policy long-term. Ask your provider if they offer multi-year discounts for signing a two- or three-year agreement instead of renewing annually. You might also qualify for lower rates if you pay your premium in full instead of in monthly installments.

3. Implement Safety Measures

Accidents cost money, for both you and your insurance company. Taking steps to make your machine shop safer can help lower your insurance premiums over time. For example, keeping walkways clear of tools and cables, installing non-slip mats, training employees on machine safety, and regularly maintaining your equipment can reduce the risk of injuries. Fewer accidents mean fewer claims, which can lead to lower insurance costs.

4. Create A Safe Working Environment

A strong safety program can help cut down your workers’ compensation insurance costs. For a machine shop, this means training employees on how to safely operate machinery, use proper lifting techniques, follow fire safety rules, and respond to emergencies. You should also post clear safety signs and keep exit routes easy to access. When your team works safely and accidents are rare, you’ll have fewer claims, which can lead to lower insurance premiums over time.

5. Adjust Your Deductible

Your deductible is the amount you pay out of pocket before insurance coverage kicks in. Choosing a higher deductible can significantly reduce your monthly premiums. Just make sure you can comfortably cover that amount if a claim arises.