What determines the cost of business insurance for my company?

Business insurance can get expensive. If you own a business (or you’re thinking about starting a business) you’re probably wondering how much business insurance costs. However, that question is not easily answered because every business is unique. They all require different types and amounts of insurance, so the cost of business insurance varies.

We would be happy to quote your business to get you an accurate idea of what your premium will be, but in the meantime, we’ve come up with a list of ten things that affect the cost of business insurance.

1. The type of business.

Some businesses have more risk than others. For example, take a graphic design firm. They have an office space and work mostly with computers. Now compare that with a landscaping business or a roofing business. There’s much more chance that someone could get hurt on the job as a roofer than as a graphic designer, so the roofing company is probably going to pay more for their insurance.

2. Your loss history.

A loss run is basically a record of all of the claims filed on your insurance policy. It gives the details of each claim.

Here’s the deal:

Insurance companies aren’t crazy about risk. If they see that you’ve had a lot of claims, they’re probably going to see you as more of a risk. And therefore the cost of business insurance could be higher.

3. What kind of insurance you need.

Depending on your business and the risks you face, you’ll need specific types of coverage to protect you. And different types of business insurance have different prices. For example, commercial auto insurance can be on the pricier side. The coverages you need (and how much coverage you need) play a part in determining the cost of business insurance.

4. How long you’ve been in business.

Established businesses with good loss records tend to get better insurance rates. That’s because they’re stable. They’ve been tested. They’re mature. Just like a grown-up with a good driving record will probably get better car insurance rates than a teenager, an established business will most likely get lower rates than the new kid on the block.

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5. Your location.

Certain areas are at more risk of natural disaster or crime than others, and that affects the cost of business insurance. More risk means more premium.

6. Your deductible.

Your deductible is the amount you agree to pay if you have a claim. You’re responsible for a portion of the claim and the insurance company is responsible for the rest.

If you set a higher deductible, you could get lower premiums because you’re accepting more risk and you’re less likely to file a claim. So, you really have to consider how much your business can comfortably afford to pay if you have a loss. If you consider your finances and discover that you could set a higher deductible, you could get lower rates for your insurance. (But of course, you don’t want to set it so high that it would be impossible to pay if you have a claim.)

7. If you can get a BOP.

A Business Owner’s Policy, or BOP, could help you save money on your business insurance. It combines general liability, property, and likely business interruption insurance into one policy. It can be less expensive to purchase your insurance this way, so if your business is eligible for a BOP, you may be able to save money.

8. If you shop around.

Shopping around for your insurance can make a difference to the cost of business insurance. Sometimes the first rate you find isn’t going to be the best one – companies evaluate risk differently, so each quote you get might vary from the last. It’s also important to compare coverage options to make sure you’re getting the insurance you need for your business.

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We would be happy to help you shop for your insurance. We can help you get multiple quotes, and we can help you identify your risks and offer solutions for how to mitigate them. And all you have to do to get in touch with our business insurance agents is fill out our quote form or give us a call today.