How much does business insurance cost?

It depends. There’s no one-size-fits-all answer because your rate depends on the specific details of your business, and all businesses are different. In general, any estimated rate you find online isn’t necessarily the rate you’ll get.

It’s important to understand the basic factors can influence your business insurance cost. And luckily, it’s not as complicated as it may seem. With just a small amount of understanding, you can secure the best combination of price and protection for your unique situation.

Factors that affect your business insurance costs

Many factors play a role in determining business insurance costs. The most influential usually are profession, number of employees and coverage needs. As you may imagine, these factors can vary greatly from business to business.

Profession

Not all business types carry the same amount of risk. A business profession known to have higher risk can expect to pay more than a business with lower risk. Tree trimmers and contractors are examples of higher risk businesses. It’s physical work done on other peoples’ properties that increases exposure.

In contrast, a home-based financial advisor doesn’t share these types of risk, so they won’t be factored into their rate. Will they pay less? Probably, but not for certain. Professional services are exposed to a different type of risk, and they often need carry professional liability insurance to stay safe.

Number of employees

Businesses with a higher number of employees can expect to pay more for insurance because their potential for claims are higher than a business with few, or no, employees. The additional employees increase exposure to accidents and other mishaps that may result in a claim.

If a business has employees, it’s required to carry workers compensation coverage. This additional coverage increases the small business insurance cost. This is required by law.

Coverage needs

The amount of coverage you select has an impact on your business insurance premium. For example, a policy with a $1 million/$2 million aggregate, will generally be higher than a policy with a $1 million/$1 million aggregate.

What is an aggregate limit?

An aggregate limit is the maximum amount an insurance company will pay toward a claim during a policy term. If your policy limits are $1 million/$1 million aggregate, you are covered up to $1 million for a single incident, but no more than $1 million for the policy term. The length of your policy term ultimately depends on your carrier, but annual terms are most common.

For example, a carpenter is sued by 3 clients over the course of a year due to faulty workmanship. Each client sues for $500,000, totaling $1.5 million. Individually, each incident is under $1 million, which meets policy limits. However, the annual aggregate amount is exceeded, meaning the third incident will not be covered.

These coverage levels typically can be adjusted to meet your specific needs, and they affect your final rate. These three factors represent the basics, and every small business owner should be familiar with them.

Of course, there are other factors that can affect your business insurance costs including:

  • Property
  • Equipment
  • Location
  • Time in business
  • And more

These also affect the cost of your business insurance premium. Getting help is easy, just try to make sure you talk to someone with experience in insuring small businesses. Learn which business insurance coverages you may want to consider for protecting your business.

Getting the cheapest business insurance

Finding the cheapest business insurance policy is a priority for the cost-conscious business owner, but always weigh price against coverage. You don’t want to pay for coverages you don’t need but you also don’t want to be underinsured when something happens. Seek balance.

To help maximize your savings, analyze your business first to determine your specific needs. Be sure to include any contractual requirements, and eliminate any inapplicable coverages. Be informed.

You can save money by adjusting your deductibles. A deductible is the amount you would pay out of pocket toward a covered loss at the time of a claim. Generally, the higher your deductible, the lower the cost of your annual premium. Just be sure you’re comfortable paying whichever deductible you select.

Of course, you have questions. Help take the guesswork out of determining your best small business insurance cost and coverage combination by speaking with a licensed professional. They can walk you through the process and customize a quote specifically for your business. Call us today, or start a quote online. It’s that simple.

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