Part 3- What You Need to Know About Insuring Your Business

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Cost of Insurance

How much will your insurance cost? That question is difficult to answer. The price you pay for a policy is determined by a variety of factors. Here are some of them:

  • Nature of Your Business: Rates vary widely across industries. Tree trimming is riskier than clothing sales, so a tree trimmer will pay more for liability and workers compensation insurance than a clothing store.
  • Years in Business: Insurers prefer to insure businesses that have a successful track record. This means that a startup may pay more for insurance than a long-established company.
  • Loss History: Insurers rely on prior loss experience to predict future loss experience. Thus, businesses with a good loss history generally pay less for insurance than those with a poor loss history.
  • Location: Insurance rates vary from state to state, and city to city.
  • Type of Coverage: The type and scope of coverage affect the price you pay. Broader coverage generally costs more than narrower coverage.
  • Insurer: Some insurers charge more or less than others. When shopping for a policy, ask your agent to obtain quotes from several insurers.

Your Business Insurance Rates Are Unique to Your Company

Each type of business coverage in your policy will provide an important and specific type of protection. You may need some or all of the recommended coverage types. You may need other types of coverage too, such as errors and omissions insurance (“E and O”), also known as professional liability insurance. Calculating your specific costs depends upon the blend of coverage you need, and how much.

For example, if you are a sole proprietor, you typically do not need to buy workers comp, so you do not need to calculate that coverage into your costs. As another example, if you transport equipment and business supplies from one location to another, you will need inland marine insurance. You may also need additional liability coverage if the materials your workers transport is hazardous, or if your employees or contractors drive big rigs that can do millions of dollars-worth of damage in an accident.

If you sell products, you will most likely need product liability insurance. If you have employees who handle money or have access to funds, you may want special protection against business fraud. Your property insurance alone may cost you a quarter of a million a year if you have big risks – such as a professional sports arena. You may pay $500 per year as a small business owner, or over $500,000 per year as a major corporation.

Every company is unique. The products and services sold, the size of the company and the risks workers face all contribute to business insurance rates.

Business Liability Insurance Costs

While there really are no average business liability insurance costs for both small and large businesses, we can consider some sample scenarios.

  1. A sole proprietor might pay $500 per year for general liability insurance, but a small consulting firm is likely to pay over $3,000 per year.
  2. A sole proprietor who hems garments out of a home office has limited liability concerns, but a landscaper may pay upwards of $15,000 annually due to increased risk.

Costs will vary considerably depending on the specific risks of the business. Professional liability insurance costs are in that same ballpark. Also called errors and omissions insurance, or E & O, this type of business liability insurance covers the “human error” risk when you give advice or offer consultation. While this coverage is typically associated with advisors such as accountants and consulting firms, many different types of small businesses carry this coverage to hedge against the risk of a law suit. Average business insurance costs for E & O coverage for small firms is typically in the range of $1,000 to $3,000 annually per million dollars of coverage.

Looking for the Best Business Insurance Rates

There are many ways to package policies, get discounts, and reduce your business insurance costs. For example, small business owners can often get a combined policy that provides all the basic coverage a small business needs. Known as a “business owner’s policy” or “BOP” this type of packaged policy can make the cost of business insurance very affordable for small a small enterprise.

Be sure to work with an agent who is experienced and knowledgeable in commercial coveragewhen seeking business insurance quotes. If you are like many business owners, you have put your life blood into building your company. Working with an agent can help you make the best decisions and balance both your risk management and cost saving strategies.

How Independent Insurance Agents are Uniquely Able to Help Business Owners

Independent agents in the Trusted Choice network who specialize in commercial coverage have a unique capability. They can provide quotes for your company from a wide range of insurance carriers, and can help you with every aspect of your business insurance, from product liability to workers comp to commercial vehicle insurance – all out of one office. This means you don’t need to go to a range of insurance companies to get all of your needs met.

Independent agents in the Trusted Choice network are based out of 27,000 member agency locations across the US, which means there is a local agent right near your business. It also means you can work with a real person who fully understands your state’s regulations and ensure that you are in compliance.

Getting Business Insurance Estimates for Your Company

The right coverage for your risks can help with everything from concerns about property damage to the risk of cyber crime. Start by assessing the hazards involved in running your business. A knowledgeable independent agent can help you assess those risks and can provide several business insurance estimates for the appropriate coverage to protect your company.

Make sure you have adequate coverage to protect your business investment so you’ll be there to serve your customers tomorrow. Find a Trusted Choice member agent today and get the quotes and personal assistance you need to get the right business coverage for your company at an affordable rate.


Call Premier Insurance Today!

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