Two businesses rarely have the same type of insurance coverage, and this can be due to a variety of factors. In some cases, it can be the type of business, and in others, it can just be the choice of provider. Either way, determining these factors can help you map out and budget just how much your company will or should be spending on business insurance. Here are some of the factors that might affect how much business insurance costs.
Cost of Deductible
Deductibles are essentially how much you will be paying before the insurance kicks in. Usually, higher deductibles indicate a lower cost for the overall policy. In contrast, when you pay lower deductibles you will be paying more for the policy. Therefore, the lower the deductible you have the more money you’ll be paying for the policy.
You may think a low deductible sounds nice, but you’ll be responsible to pay more in the case of an accident. If this were to happen it would be detrimental to your business financially. It’s important to base your deductible on what you’re realistically willing to spend.
The Type of Insurance Policy
It’s also worth mentioning that the type of insurance policy you have can greatly affect your costs. For instance, umbrella policies will always cost more than general liability policies. But keep in mind that the benefits you get from general liability insurance are significantly less than that of an umbrella policy.
You could also save some money by bundling your business insurance with your business owner’s policy.
The Size and Location of Your Business
This is easily the most obvious factor that influences your business insurance costs. If you run a fairly large company it will cost more to protect it. Your business’ size affects property insurance and general liability insurance coverage.
But other than the size, the location of your business can also dictate the cost of insurance. If you’re located in an expensive area, insurance is bound to cost more.
If your company is more profitable, insurance companies can make the case that your company has more assets worth protecting. Therefore, they can charge you more if the businesses’ yearly income surpasses a certain threshold.
The Number of Employees
The insurance costs of individual employees will affect the total cost of insurance for your company. The more employees you have, the more general liability, professional liability, and workers compensation insurance you’ll need. Therefore, the number of employees you’re responsible for will greatly affect your insurance costs.
You can contact your insurance provider to find out more about the different factors that influence business insurance costs. It’s likely that there’s factors that are totally unique to your business, like the number of claims filed and your insurance limits.