Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The price of business insurance depends on the level of coverage that is in place. A business owner will want to be sure that he or she has enough protection in place without having excess coverage.

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The amount that a company can pay in premiums can range from a few hundred dollars annually to more than $1 million.

Types of Business Insurance

There are several types of coverage available to business owners. General liability insurance coverage protects the business against losses arising from accidents or injuries. It also pays out on claims of negligence made against the company.

For companies that manufacture or produce goods, product liability insurance covers losses due to a defect that causes injury. The amount of coverage that a business owner would choose in this instance depends on the type of business he or she owns. A business that sells or products that are not likely to cause injury, such as clothing, would need less coverage than one that sells chemical products.

Commercial property insurance coverage protects against various kinds of losses that can occur on company property. It covers the building itself against wind, hail, fire and smoke damage, vandalism and civil disobedience. This type of coverage also includes provisions for business interruption and lost income. Equipment, money and computers are also covered under a commercial property insurance policy.

Some types of businesses are required to have professional liability coverage in place. This type of coverage is also called malpractice insurance and it applies to errors or negligence when providing services to customers, clients or patients.

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Factors Affecting Business Insurance Premiums

When an insurance company receives an application for coverage, it goes through the company’s underwriting process to determine the cost of the business insurance policy. The insurer will need to determine the level of risk that the business applying for coverage presents before it can determine whether to offer to provide coverage, and how much to charge for premiums.

The type of business you are operating is one factor the insurance company considers when setting rates. If your business presents a relatively low risk from an insurance standpoint, then you would be charged less than one that historically has resulted in numerous claims.

Location matters for insurance purposes as well. If you have applied for commercial property insurance coverage and your business is in an area where there have been several claims made in the past, you will likely be charged a higher premium because of this fact.

Insurance companies may also investigate your credit score when setting rates. An insurance customer with a poor credit history is considered a higher risk for insurance purposes. Making a point of paying your company’s suppliers and other obligations promptly will make you more attractive as a business insurance customer.

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How to Keep the Cost of Business Insurance Down

If you already have business insurance in place, make a point of reviewing your coverage annually. Not only will this help you to be sure you are adequately protected, but you will be able to reduce or eliminate coverage that you are paying for that no longer meets your needs. If you find that certain aspects of your business, such as items you carry in your product line, are making the cost of coverage too expensive, you may want to consider making changes to the way you operate to bring costs down to a more affordable rate.

Small business owners who are member of an association may be able to get business insurance at a group rate. If you are currently a member of a trade group or business association, contact the administrator to find out whether this option is available. If not, consider joining a group that offers this benefit. You will need to work out the math to figure out whether the savings on the cost of business insurance are worth the fee to join the group.

In a situation where the company’s location is contributing to the high cost of business insurance coverage, a business owner may wish to consider relocating it to an area where it costs less to get insurance coverage. Before doing so, do ask for quotes for coverage based on the location you are considering.

Shopping around for coverage is another option for business owners who want to avoid paying too much for their business insurance coverage. Since each company uses its own underwriting procedures and sets its own rates for coverage, comparing pricing from several companies can help a business owner have money.

Use the free tool to compare business insurance quotes today!