Whether your business is big or small, you need to be sure that you have the right level of coverage from your commercial liability insurance. However, you don’t want to overpay for coverage either. The cost of general liability insurance for your commercial enterprise can be hard to estimate without speaking to a licensed insurance agent, but there are a few things you should know before you begin gathering quotes.
When it comes to pricing your general liability insurance, there are a number of factors that need to be considered. An insurance agent, like ISU-ARMAC Insurance, can help guide you through the policy decisions that will determine your final rate. Here are a few of the things your agent will take into consideration when pricing your policy:
It stands to reason that as your company grows, the size of your policy must grow with it. You are likely to have more employees performing more complex tasks, which means that there is a greater risk from the insurance provider’s perspective. In addition, as your company grows beyond the level of small business, there may also be new regulations and guidelines that govern your minimum coverage levels.
In addition to the size of your company, your insurance provider will want to know what type of work you are performing. Office work is generally considered lower risk than construction work, and private office spaces are less risky than retail spaces where the public could be injured. The industry you are in could have a big impact on your final rate.
At the lowest level, it is standard for a business to have a policy that covers $1 million per incident and $2 million dollars aggregate. This level of coverage may be enough for small businesses, but over time, it is likely that you will need to raise your aggregate as you gain clients and have more interactions which could put you at risk.
One way that insurance agents typically adjust the cost of a policy up or down is by adjusting your deductible. This is the amount of money you would pay out of pocket before your insurance kicks in to cover a claim. A higher deductible means that you pay more in the case of an accident, but it could lower your policy price significantly on an annual basis.
While deductibles are an easy way to make your policy fit your budget, it is important to remember that there are legal limits to how high your deductible can be, and going with the highest deductible is not always the wisest decision, even if it saves you money on your premium. Your agent can guide you through this decision based on your business’s risk factors and budget.
Much like real estate, insurance prices are highly dependent on location. Some areas are simply more expensive than others due to things like crime rates and the cost of repairs or medical care in the event of an accident. Unfortunately, many of the costs associated with location are out of your control unless you are easily able to relocate your business, and even then it may not make sense to do so.
The final consideration your insurer will make has to do with your claim history as a business. If you are a new business, they may not have much data to go with, but if you are well established, they will look at the number of claims you’ve had in the past and what kind of payouts have been associated with those claims. The more claims you have, and the more times insurance has had to cover for you, the higher your premiums will be.
The annual cost of your commercial liability insurance can run anywhere from about $300 to $5000. Given the number of factors that can impact your final policy rate, it’s important to speak with an agent to get a better understanding of where your business falls on this scale. Even so, many businesses fall into the lower end of this spectrum, paying less than $1,000 per year, with only the highest risk industries paying the upper end.
As you can see, the cost of your commercial insurance can vary drastically by industry and location, along with the amount and type of coverage you need. The best way to plan for your premium is to speak with a registered insurance agent who can assist you with finding the right policy for your budget and needs.