Many factors can determine your business insurance premiums. Some things, like the size and type of business, are relatively easy to determine. But other factors like claims' history can be more challenging to quantify.
This post outlines two less-obvious factors that affect full coverage business insurance premiums. Understanding these factors will help you make more informed decisions about your business insurance coverage and get the best rates possible.
The Type of Business
The type of business you operate will have a big impact on your business insurance premiums. For example, businesses that an insurer considers high-risk, like those in the construction industry, will typically pay more for business insurance than low-risk businesses, like office-based businesses.
This is because high-risk businesses are more likely to experience a loss that needs to be covered by insurance. Businesses in the construction industry, for example, are more likely to experience property damage or liability claims than office-based businesses.
Additionally, the type of business you operate will also affect the type and amount of coverage you need. For example, a business in the manufacturing industry will need a different kind of coverage than a retail store.
Product liability insurance is vital for businesses that manufacture products, as it covers claims that arise from injuries or damages caused by the product. On the other hand, service business owners may need business interruption insurance. This policy covers lost income if the business cannot operate due to an event like a natural disaster. Both these covers have different terms and levels of risk, so premiums will differ as well.
To get an accurate picture of how much business insurance will cost your specific business, speak with an insurance agent who can tailor a policy that fits your business's needs.
The Location of the Business
Although many people might not know this, the business location can also affect your insurance premiums. Businesses in certain locations are more likely to experience different types of losses than businesses in other locations.
For example, businesses in areas prone to natural disasters, like floods or earthquakes, will typically pay more for insurance than businesses located in areas that aren't as susceptible to these types of events. There's a higher risk of property damage or business interruption for businesses located in such disaster-prone areas.
Additionally, businesses located in high-crime areas may also pay more for full coverage insurance because they are more likely to experience theft or vandalism. In fact, businesses located in urban areas are often considered to be at a higher risk for crime than businesses in rural areas. The higher risk will translate to higher full coverage insurance premiums.