Insurance prices can always vary from small, medium and large businesses. There are several factors that can affect the overall cost of commercial insurance—the size of your business is only one condition. It’s important for all business owners to be aware of what could affect their business premiums, and what exactly they can do about it. In this article, we’ve outlined the five main factors that affect the cost of business insurance.
1. Potential risk
Certain industries are naturally at a much higher risk than others, so risk is a big factor for business insurance. For example, construction companies are much more likely to be at risk of a visitor filing a lawsuit against them due to site injury rather than a retail business or office corporation. The more risky your business is to insure, the higher coverage costs will likely be. Fortunately, smaller businesses or businesses with lower risk will benefit from more affordable rates.
2. Business location
The location of your commercial business plays a significant role in your business insurance rates. For instance, if your company is located somewhere that is more prone to extreme weather conditions (such as tornadoes, floods or severe snowstorms,) then your business is potentially at a higher risk of structural damage. As a result, insurance companies may only be able to offer higher insurance rates. Additionally, a business that is located in a high-crime area will be subject to more expensive insurance premiums because it is at risk of theft or vandalism.
3. Claim history
Your business’ insurance claim history affects future rates. If your company has filed several insurance claims in the past few years, it is likely that you will be paying higher insurance premiums. This is because the more claims you file, the riskier your business is perceived. Insurance companies view a high-claim history as a risk to them, which is why it is more expensive for certain businesses to obtain affordable coverage rates.
4. Number of employees
Professional Liability Insurance and General Liability Insurance are most commonly affected by the number of employees at a business. Some insurers will use the number of employees you have as a measure of how big your business, and therefore, the amount of risk.
5. Annual income
It’s no secret that a business that is more lucrative and successful will have more to protect in the event that something threatens the company. High sales also means you likely have more customers and more risk exposure. For this reason, the higher the yearly income of the business, the higher the insurance premiums will likely be.
isure business insurance is designed to ensure the protection of business owners as well as their business! We are customer-solution based and committed to understanding your business to find coverage solutions that work for your needs. Contact us for a no-obligation, free commercial business insurance quote here.