Without business insurance, you could end up paying out for accidents, injuries and law suits – risking your business and personal finances. So it’s clear that to protect your business, insurance is absolutely vital to it’s survival. But how is it calculated? It’s a question many business owners have the right to ask, so here are a few pointers on the process:
The Industry
Depending on the industry, some premiums may be higher than others, for example if you work in the retail industry, your premiums may well be lower than that of someone running a construction business.
Type of Policy
Understandably, there is no ‘one fits all’ when it comes to business insurance, and quite rightly so. Your business requires insurance that will directly help your business in it’s time of need, which will also impact the types of policies required. Some policies naturally will be more costly due to their nature, so it’s important to know what policies are right for your business.
Amount of Risk
Looking at the work you do, the people you come into contact with, and the effect your business has on its consumers are all factors when looking at the risk involved. Heavy machinery and equipment will generally be more costly to insure than a small toolbox, so be aware that the equipment you use and products/services you deliver will all have an impact on the cost of your premium.
Business Size
This includes the number of employees as well as the premises. The number of employees you have directly indicates how much your employer’s liability might cost.
Location
A restaurant in a high-risk flooding postcode or a shop in a high crime area can impact the cost of your insurance.
Previous Claims
If you have had numerous claims in the past, then your insurance premium will be higher than before due to your business being seen as ‘risk-prone’
Excess
Having a higher excess will normally lower your premium, however it’s important to note that this will mean you will have more to pay if you make a claim.
Your companies worth:
The more your company is worth, the more you can potentially lose, which taken into consideration when pricing your insurance premiums.