Regardless of your business size, certain risks (like lawsuits or catastrophic events) can bring your business to its knees. Luckily, you can protect your business against such unforeseen risks with commercial insurance.
Some types of insurance you can consider are property insurance, worker's compensation insurance, and product liability insurance. However, insurance premiums are not one size fits all. Check out some factors that can determine your commercial insurance premium rates.
The Type of Business
Some businesses are riskier than others. For example, construction or manufacturing businesses handle heavy or dangerous equipment. So, the risk of injury to workers is higher than in an office setting or in the retail industry. Hence, the insurance company charges you higher rates for general liability insurance. Similarly, a plumber has higher risk exposure than a real estate agent, hence the higher insurance premiums.
To put it simply, the higher the chances that your insurance company will settle a claim, the higher the premiums you'll pay. Luckily, low-risk businesses enjoy affordable rates. Either way, ensure that you fully disclose your business details to your insurer so that you get sufficient coverage.
Location of the Business
Location is an influential factor that insurers consider to calculate risk. Oftentimes, major business threats are either crime or natural disasters.
For example, a business located in an area with a high crime rate attracts high insurance costs due to the risks of break-ins and vandalism. Also, if your location experiences extreme weather events (such as hurricanes, earthquakes, or wildfires), property insurance will cost more than for a business in a placid environment.
The high premiums are due to the increased risks of property damage should any of these unfavorable events occur. To save money on commercial insurance costs, a move to a low-hazard and crime-free location would be ideal.
Insurance providers also consider the type and number of previous claims. If you've had too many previous claims, the insurance company considers you a high-risk business and charges you more for coverage.
For instance, if one driver in your company has multiple accident claims while other drivers maintain their insurance without claims, you will pay more for auto insurance. So, you should strive to keep your claims to a minimum to enjoy low future premiums.
Your insurer will consider these three factors to determine your insurance costs.
Contact an insurance agent to learn more about these and other insurance services.Share
2 March 2022
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