What affects the costs of business insurance?
Saturday, May 30th, 2009
The costs of insuring a business
Business insurance is a critical expense for businesses, but affordable business insurance is available.
One factor in the cost of business insurance is the economy in general and what’s happening within the insurance industry. Like any product, insurers compete with each other to sell policies, and prices may change based on what other insurers are offering.
The overall economy also impacts the price an insurer can get for a product – if the economy is doing well, prices are likely to be higher, because businesses can afford it. Another factor out of the control of businesses seeking insurance is the type of business a company conducts, and what industry it’s in.
Each industry and business has its own unique risks and insurers base their policies and prices on these risks.
Businesses can control some costs, though. A higher deductible can result in a lower monthly premium, but it’s important to find the balance between a reasonable deductible and a reasonable monthly premium.
Purchasing business insurance in package policies, such as a Businessowners Policy for small to mid-sized businesses, is another way to reduce costs. Loss prevention activities – such as installing smoke detectors or having certain hiring practices in place – may reduced the risk of certain types of losses and insurance companies reward businesses for this with lower costs.
Finding the right insurance coverage at the right cost is a complex matter. It takes a bit of research to understand the general risks and costs. Working with an insurance professional – a broker, who typically works with larger businesses, or an agent, who works with smaller businesses or those with smaller risks – is the best step to take to ensure purchasing the correct type and amount of insurance, at the best cost.