What Influences Your Small Business Insurance Premiums by pexels-tim-mossholder-3345876

What Influences Your Small Business Insurance Premiums?

Small business owners know that they need to have a number of insurance policies in place in order to protect their livelihood. Options like property insurance, liability insurance, business interruption insurance, and more are some of the many policies that you should consider.

While it’s clear that you need to have insurance, what isn’t so obvious are the factors that go into the price of each policy. What influences small business insurance premiums? There are actually several things that insurers consider, such as:

The Age of Your Business

This is a tricky one because it can go both ways. A new business obviously doesn’t have the track record of an established one, so premiums may be higher. On the other hand, a small business that’s been around for a while might have filed a lot of claims in the past, so their premiums will also be higher than usual. It comes down to several factors here, including credit history, former claims, and more when insurance companies are looking at how long your business has been open.

Where You’re Located

Location plays a role in your insurance premiums. A business located in a part of town that isn’t so great (i.e., prone to break-ins and other issues) tends to have higher liability and property insurance premiums than one that is in a relatively safe area. Other location factors, like being located on a floodplain or in a spot prone to windstorms, also play a role in insurance costs as well.

The Type of Business You Run

Some businesses have a larger chance of needing to call in an insurance claim. For example, if you run a construction or janitorial service, then you run the risk of an employee accidentally breaking something belonging to a customer while on the job, setting up a liability claim. Other businesses, such as accounting or consulting companies have less of a risk, so they usually have lower insurance premiums.

Do You Own or Rent Your Building?

Business renter’s insurance and standard business property insurance are two very different things. One is designed for companies who rent their buildings and are only responsible for the furniture, fixtures, goods, and other things inside of the structure. The other is for businesses who own or have mortgages on their buildings, leaving them responsible for everything from the grounds to the structure itself. As you can imagine, the difference between the prices of the policies can be quite large, with the standard business property insurance costing more.

How Many Past Claims Have You Had?

When it comes to determining the cost of business insurance premiums, past claims matter as well. A business that has had more prior claims called in is seen as a higher risk, so their insurance premiums will cost more. After all, they’re likely to have other claims in the future, running the risk of costing the insurance company more money. Obviously, small businesses with fewer claims are less of a risk, so they’ll have lower premiums.

Want to explore your insurance options and ensure that your small business is fully protected? Our knowledgeable team at Spivey Insurance can help review your current coverage or help you set up a new policy that meets your business’s needs. Contact us today.

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