How Much Does Business Insurance Cost?

Business Insurance Cost

Chances are you have landed on this page of Enhanced Insurance looking to find answers to the question “How much does business insurance cost?”. Judging the value of an insurance policy is best left in the hands of a risk manager. If your business isn’t large enough to have a professional risk manager on staff, the next best thing is to have a discussion with your local independent insurance agent. You might consider buying your insurance online.

It’s a waste of time to talk about average insurance cost for the average business. A dynamite factory would obviously have a much larger premium than a dress maker. A jam factory with dozens of over the road truck hauling fruits from all over the country would expect to pay much more than an accountant with a private passenger auto used to infrequently call on clients.

You need to rely on the services of an independent agent who can shop your coverage to a variety of companies. Those companies will compete for your business and in the process will actively try to offer products to you that others in similar businesses to yours have ordered.

Business insurance is an intangible, but those who work with it every day get a sense of what coverage should be offered to which business. They have tools to help them with that task.

Insurance Coverage Your Business Might Need

  • Workers Compensation
  • General Liability
  • Products Liability
  • Liquor Liability
  • Personal Injury and Advertising Liability
  • Umbrella
  • Crime
  • Fire and other Property Insurances, Including Business Income
  • Auto (Liability and Physical Damage)
  • Equipment Breakdown
  • Data Security
  • Professional Liability and Errors and Omissions Liability
  • Director’s and Officer’s Liability
  • Life and Health

This is a brief list. Obviously a Marina would place many other coverage items as more important. An auto dealer might consider his Open Lot coverage to be his first consideration.

What Factors Are Important to Your Business Insurance Cost

Business Insurance Cost Factors

How much insurance you purchase and what kind is extremely important. What past experience you have had in your business and you loss history will be taken into consideration. External factors, such as geographic locations and neighboring buildings are factors.

Having sat at an underwriter’s desk and priced thousands of commercial accounts, I can tell you that presentation is important. If an underwriter senses a lack of necessary information, the pricing will reflect a need to cover the unknown risk or the underwriter might decline to quote the risk. The communication between the insurance company and the agency is important.

In many instances your agent is able to price your risk using insurance company software. That software will often prompt him to suggest coverage to you that you might not have included in your original request. Good communication between you and your agent will pay dividends.

Because an agent will have worked with a number of companies gathering information he will be able to help you with decisions as to how to efficiently spend your premium dollar. He will be able to help the underwriter see those risk attributes that allow credits to be applied to your rates.

Property premiums are usually closely tied to amount of coverage at risk. A $500,000 building will cost about double to insure that a $250,000 building costs as long as age, construction, occupancy, location, fire protection class, etc. are roughly the same. On the other hand, it does NOT cost double to increase your limits of liability from $500,000 to $1,000,000. Similarly a $2 million umbrella is normally much less than double the cost of a $1 million umbrella.

It is extremely hard to estimate a figure for professional liability. An accountant would pay much less for his E&O than a surgeon would pay for his Malpractice liability.

Usually how much insurance you purchase has a lot to do with your contractual and statutory requirements. Your independent insurance agent can help you determine how much you business insurance will cost by helping you review your leases and other contracts. Your agent, through his professional association and ongoing professional educational training is a good source for discussing legal coverage demands.

Often an insurance agent can help you understand other methods of risk management such as transfer and mitigation. He can often arrange for his contracted companies to provide safety engineering to help you avoid claims.

Often (but not always) you can save money by placing as many coverage areas under one company as possible. Make sure your agent is willing to meet with you at least annually to keep your coverage up-to-date.

Other Enhanced Insurance articles related to Small Business Insurance:

Independent Contractor Insurance

Should a Small Business Buy Insurance Online

Types of Insurance You Need as a Small Business Owner

First Named Insured in Commercial General Liability Insurance

Small Business Insurance

Home-Based Business Insurance

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

Jim operates an insurance agent network called Insurance Partners, aggregating agents in the Midwest for over 25 years. He was National Agent of the Year for Metropolitan in 1993 and Midwest Agent of the Year for Travelers in 2011. He served as a founding board member of the Surplus Lines Association of Minnesota.

Leave a Comment

Your email address will not be published. Required fields are marked *