Should I Pay My Small Business Insurance Premium Monthly or Annually?

Running a small business comes with tough financial decisions – and choosing how to pay for business insurance is often one of the most important.

In fact, over half (51.7%) of Canadian business owners say the cost of insurance is a top concern, according to the annual Zensurance Small Business Confidence Index survey.

The reality? Business insurance premiums can vary widely based on your industry, business size, and risk exposure. And while paying your entire premium upfront once a year might save you some money in the long run, it’s not always realistic – especially if your business is navigating tight cash flow.

Download Our FREE Insurance Guide

Learn everything you need to protect your small business.

Your email address will be used by Zensurance to provide latest news, offers and tips.
You can unsubscribe at any time.

That’s why Zensurance offers flexible business insurance payment options – monthly or annually – so you can choose what fits your cash flow.

But which payment plan is better? And what trade-offs should you consider?

Let’s explore the pros and cons of monthly vs annual business insurance payments, so you can make the best decision for your company and budget.

Paying Your Insurance Premium Monthly

Many small business owners prefer monthly business insurance payments because they make budgeting easier, and you can avoid having to shell out one lump sum for your policy.

It’s not uncommon for a broker or insurance company to offer monthly or annual payment options. For an existing business that is renewing a policy, you will be asked to pay the first month of your premium, followed by 11 monthly payments.  

Startups and new small businesses can begin coverage with just a 20% down payment, followed by affordable monthly insurance payments.

If you miss making a payment (which can happen to anyone), you are given a 30-day grace period to catch up without triggering a lapse in your coverage.

Monthly business insurance payments offer convenience, especially when automated through your bank account. For instance, if you have a general liability insurance policy that costs $450 per year and you pay $37.50 for it each month, you can automate those payments through your bank account. 

You’ll know which date each month the withdrawal will happen, can track the payments throughout the year, and comfortably manage your budget. 

However, by opting for a monthly payment plan, you are also charged a small administration fee by your insurance provider to process the monthly payments manually.

Paying Your Insurance Premium Annually

Some small business owners may pay their premiums in one annual payment. If you can comfortably afford to do so, there are benefits to taking this route. 

For starters, there’s the peace of mind knowing you’re covered for 12 months until your policy comes due for renewal, and you don’t need to worry about paying for your policy or missing a payment. On the other hand, you might incur a late payment fee if you miss a monthly payment.

Annual business insurance payments reduce administrative tasks for both you and the insurer, and eliminate monthly processing fees.

Since they don’t have to manage monthly payments manually, they won’t charge an administrative fee, which is usually the case when making monthly payments.

Making the Right Decision That Suits Your Budget

The decision you make depends entirely on your business’s finances. 

By paying your premium as one lump sum and avoiding monthly financing fees, determine how much you’ll save. For instance, if paying annually will save you a few hundred dollars, and paying upfront won’t cause any financial strain, it may be the best way to go. 

But paying a premium monthly is fine since it breaks up the cost into manageable amounts throughout a policy’s term. Furthermore, some insurers may offer semi-annual and quarterly premium payment options.

Talk with one of our licensed brokers about which option may be best for you when initiating a new policy or renewing an existing one. 

Also, Zensurance does not charge its clients any fees for purchasing a policy through us, whether for payment processing, account maintenance, or getting a certificate of insurance. 

Instead, when you buy a policy from Zensurance, we receive a small commission from the insurance provider underwriting it.

Get the Low-Cost Small Business Insurance You Need Easily

Zensurance makes getting the low-cost business insurance protection your profession or small business needs quick and easy.

Fill out our online application for a free insurance quote. 

Our knowledgeable team of licensed insurance brokers will shop our partner network of over 50 insurers to get the low-cost protection you need, customize it to suit your specific requirements and budget, and answer any questions.

– Updated  September 17, 2025.