Factors that Influence the Cost of Your Business Insurance

Are you concerned about the premium you will have to pay for your business insurance? Insurance is part of your overhead, so it’s understandable that you will want to keep it affordable. Some of these you can often control yourself. 

Understanding Your Business Insurance Premium

Like with all insurance, you will have to pay for your business’s coverage through a regular premium. Your premiums will vary from those of other business owners, even if you buy from the same insurers. Sometimes, you will pay only one premium for all coverage. Or you might pay premiums for different coverage separately. 

Insurers base premiums around the policyholder’s risk ratings. A risk rating shows them your likelihood of having to file a claim on a policy. The higher your risk of filing, then the more your premium might cost. 

What Influences Your Commercial Insurance Premiums?

Many businesses get coverage through business owners policies (BOPs) or commercial package policies (CPPs). These are policies that offer several essential types of coverage in one place. Often, by buying your coverage in a CPP or BOP, rather than piecemeal, you can save premium costs. 

Naturally, the amount of business insurance you buy can increase your premiums. Yet, other factors can influence costs too, that will impact your risk rating:

• Claims History: If you make claims on your commercial policies, then that is a signal that you might do so again. Therefore, you might have to pay a higher premium for policies that renew after a claim occurs. It’s normally best to consult with your agent to know when you make a claim and how to proceed in certain situations rather than just calling in a claim. 

• Deductibles: For coverage like property damage and possessions insurance, you will likely have to pay a deductible. The higher the deductible you choose, the lower your premium might be, because you shift cost burdens away from the insurer.
  

• Number of Employees: As you add employees, your liability risks will increase. Plus, by hiring more people, you might have to buy more coverage. Each factor can driver up your premium. 

• Revenue: Insurance carriers rate different business industries on their revenue to calculate the risk exposures they are responsible for. For example a business with a revenue of 1 million dollars will have a different exposure than a business with 10 million dollars in revenue.

• Location: If you live in an area prone to perils like severe weather, vandalism or other risks, then your property coverage might cost more. 

• Industry: A distillery will have more risks than a medical office or a restaurant. Therefore, the distillery’s premium might cost more. 

The risk your insurer weighs to determine costs will apply differently in all cases. Thus, work alongside your agent to determine the right types and limits of coverage for you. They can then look at more specific risk factors to determine your final premium. 

Information Source: ITC

For assistance with your business insurance contact the professionals at G & H Financial Insurance at 281-395-5497.