Having insurance on your business is important and don’t let anyone tell you otherwise. There might be a time when it is tough to get one, because of the pricing for instance, but having insurance to protect you and your business is a must no matter what.
There are numerous businesses out there and they are all different in one way or another. This is one of the reasons that everyone’s insurance is a bit different, especially in price.
You have to understand that insurance houses do not grade each business, each economy branch the same way. If your business has to pay a bigger premium than someone else then there must be a valid reason for that.
Usually, the insurance company you opt for will tell you all about these and they will explain what you pay and how much you pay for, but today we will get you a brief breakdown on some of the most important factors that are surely influencing the price of your insurance.
If you own a business and if you are expanding then having insurance that will have you covered entirely is your prime task. If you haven’t already decided on which one you need, try Apollocover.com/business-insurance/ and see what they can offer you. In the meantime, read the article through and see what influences the price of the insurance so much.
Table of Contents
1. Your branch or niche
I have already mentioned this at the beginning of the article and I will try to elaborate a bit on that. It is a straightforward deal as it sounds. You have multiple markets, multiple different businesses and multiple different risks associated with those.
This is probably the biggest factor that increases or decreases the price of the insurance for any business, small or big. You can also try and imagine two different businesses for reference – one is an office type business lice accounting firm while the other may be a metallurgy or wood processing one.
You can see from the get-go that these two have different risk factors attached to them and based on that one business will have lower while the other will have a higher insurance premium. Different branches and different businesses will have some things in common, but generally speaking the nature of what they do heavily influences the price of the insurance.
2. Your location
This is also a factor that heavily influences the insurance price and it does so in two ways. Firstly, it does have a tie to the actual location your business is in because no two same businesses in two different geographical locations will have the same insurance price.
It all comes down to regulations, laws, the premiums certain insurance companies set and other things that are related to this. The other thing that this factor takes into consideration is the placement of your business.
This means that the insurance company will take into consideration the region you are in, is it tied to many of the known natural disasters like fires, floods, hurricanes and other similar things. This plays a big role because if you are in a region where there are floods often, or forest fires, you will see your insurance premium skyrocket due to this.
To try and reduce these premiums you can take some steps by yourself and reduce the risk of property damage due to the factors we mentioned, but do not expect to be that successful.
3. Where and how you run your business
When getting insurance for your business the first thing you will be asked is do you own your building or property for that business or is it a rental one?! Is it a business run out of a building or an office space on one floor?
These are all the things that increase or decrease an insurance premium and you have to be aware of that. If you own a family restaurant, for example, and you are looking for insurance you can bet that your premium will be steeper than mine, if I ran a real-estate business from one office that is rented.
There are numerous hazards in these situations and, again depending on what you do, and where do you do it from your insurance premium will vary a lot.
5. Have you had any prior claims?
Now, this is for you that already had insurance and now that you are getting a renewal or searching for a new one, you are getting higher premiums and you cannot figure out why.
Well, the fact is that all your prior insurances have been kept and all your prior claims, from any other insurance businesses, have been stored and documented. If your business has had claims, bigger or smaller, it does depend a bit, you will probably see an increase in your premium.
This is because all insurance companies are trying to protect themselves in the same way they are protecting you. They need to increase the premium to all businesses that have had claims before to either make them more careful or to financial fence themselves from potential losses.
Businesses that haven’t had any claims for some time may also see lower premiums as a reward for doing their job responsibly and with a careful approach. You also need to know that some of these things can be influenced by you while others can’t.
Trespassing on your business property, stealing and machinery or office space destruction is something you can not influence, but workers safety or claims from the third party because of your carelessness during your operations may cause you to pay a hefty premium next time.
All in all, business insurance is important for reasons that are too obvious to even talk about them. Insurance gives you a safety net, security and a goodnight sleep. This is even more important if you are located in parts where natural disasters are often destructive.
Even though your insurances may be steep from time to time, try and see if there is anything you can do to lower it or see if there are any changes you could make to lower the risks that affect the insurance premiums.