Many factors are taken into account when calculating the price of Business Insurance. The prices may be higher or lower depending on specifics of the business. These are the factors that will influence your insurance costs:
- Industry – Low-risk businesses will typically pay lower premiums than high-risk business. If you own an accounting firm, you will pay lower premiums than a construction company owner.
- Location – Physical location of your business impacts your premiums significantly. Firstly, if your business is located in a more populated city, you will pay higher premiums than businesses located in remote areas. Secondly, for specific types of insurance, such as flood or earthquake insurance, having your business in a high-risk area will lead to higher premiums.
- Size of business – Some policies, like Commercial Property and Commercial Liability, will be influenced by the dimensions of your business’s location and will be higher for larger properties and lots.
- Number of employees – The more employees work at your company, the higher your premiums are. The number of employees particularly affects your Commercial Liability, Professional Liability, and Workers’ Compensation insurance policies.
- Revenue – More assets owned by the company means higher insurance premiums. For example, businesses that generate $20,000 in revenue will pay lower premiums than businesses generating $400,000.
- Type of policy – Keep in mind that different policies have different costs. Some coverages are on less expensive side, for example, General Liability (around $750 average premium in the US), while others are much pricier, such as Commercial Umbrella (around $1,500 average premium in the US).
- Deductible – Lower deductible results in higher premiums, just like with personal insurance policies. If you choose a policy with higher deductible, the policy cost will be lower.
- Limit – Since you decide on the desired amount of coverage when you purchase the policy, selecting a higher coverage limit will result in higher premiums.
Reviewing these factors in relation to your specific business will help you to understand why your insurance premiums are high. If you still have questions, our licensed independent agents will be happy to explain your policies to you.