Businesses, both large and small, need insurance as a protection against the possible associated risks. The choice of coverage, however, varies based on the structure and needs of the enterprise. Various factors, therefore, need to be considered to ensure one buys the right business insurance. The selection process is tedious and requires the assistance of a specialist.
One of the most frequent questions asked by insurees-to-be whenever an insurance policy is marketed to them is, 'What is the cost?' Getting an accurate answer is virtually impossible because of the diverse determinants of insurance premiums to be considered. Nonetheless, you can estimate the figure based on the available data. Some reputable organizations have collected insurance data and published them online, making the search easier for consumers.
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Before you begin paying for a specific insurance policy, numerous factors are considered by the insurance provider. The amount you pay will be based on factors such as;
Different sectors are associated with varying levels and number of risks. Insurers will, therefore, need to determine whether your business falls under the hazardous category, which has more chances of losses, or not. Your premium will be higher if your business is deemed riskier by the insurer.
It is natural to think that if you had a cold in the previous winter, you might catch it again the next similar season. Insurance providers will thus charge more premiums for companies that have a loss history compared to their counterparts that have no property loss record since they associated with higher risk vulnerability
the premium rates may not be the same in two cities, even if it is the same insurer providing the services for similar businesses.
well-established companies that have been operational for several years are more likely to pay less in comparison to start-up businesses with undetermined performance records.
Just like the price of a particular pair of shoes may vary with the vendors, the premium you pay is more likely to depend on the insurer of choice with other factors remaining constant.
There are numerous other aspects that insurers consider in pricing the various kinds of insurance. For example, your business's salary total and the number of employees will be used in calculating your workers' compensation premium, whereas your total salary has no impact on the property premium. Similarly, commercial property premium is influenced by property value but not workers compensation premium.
Insureon is an insurance agency catering for small-sized enterprises that operates mainly online. The company has published tons of data on the premiums its clients pay for different types of insurance. The information spans several years and thus forms a credible premium prediction tool for small business owners.
Generally, insurance cost depends on the consumer's kind of coverage. Insurance data will, therefore, be more meaningful to clients if they are collected and interpreted category-wise. Insureon does premium tracking for the various types of coverage as follows;
General liability coverage protects businesses against third party property destruction or bodily injury claims. Hence, this type of insurance is essential for every enterprise. Averagely, Insureon clients pay $ 500 as premiums for general liability coverage. Notwithstanding, the rates will vary by the type of industry. For example, in the construction industry, companies pay a premium of about $ 825, while photographers pay $ 275 on average. Businesses in the landscaping and cleaning industries pay approximately $ 530. It is estimated that 48% of the insured companies pay annual premiums of $ 300-$ 600.
Besides the industry type, the premium for your general liability insurance partially relies on the limit of insurance your purchase. About 92% of Insureon service consumers buy an insurance limit of $ 1 million per incidence and $ 2 million aggregate.
This type of insurance is designed for business providing specialized services or expert advice to other companies. Such specialized service businesses include structural engineering, accountancy, and architectural companies. Insureon reports that its customers' premiums for this policy are $ 710 on average.
Some activities are riskier than others and therefore have a higher propensity to generate costlier claims. As a result, the premiums paid also vary by industry. For example, building design experts pay an average of $ 1705, while the accountants pay about $ 400. The middle ground is professionals in the real estate industry that pay approximately $ 665.
For E&O coverage, most Insureon customers buy an insurance limit of $ 1 million for a single occurrence and $ 1 million aggregate
BOP is a two-in-one package as it includes both commercial property and general liability insurance coverages. It is the favorite of a majority of small business owners. From Insureon’s database, $ 636 is the median premium for business with BOP insurance. Similar to general liability coverage, the rates depend on the industry. For instance, food and beverage businesses pay averagely $ 1608, while consultation businesses are charged about $ 500. For retailers, the premium is estimated at $ 788.
Workers' compensation is mandatory coverage for any business that has employees. The premium for this type of insurance is determined by the assigned business classifications, the rate per classification, total salaries, and experience modifiers. The premium rate has a wide geographical variation.
Customers at Insureon pay an average of $ 560 for workers' compensation coverage. But there are outliers such as businesses in the construction industry that pay $ 3264, landscapers paying $ 2769, and cleaning services that pay $ 1813. On the other hand, accounting and information technology companies pay $ 396.5 and $ 436 per year.
The premium for this type of insurance is determined mainly by the kind of automobiles you own and how they are used. Trucks will cost more than private passenger vehicles. The average premium for auto insurance is $ 1704.
Umbrella insurance, also referred to as excess liability policy boosts your insurance limits for existing liability policies such as general liability, employer liability, and auto liability. The primary factors influencing your umbrella premium are your purchase limit and nature of the business.
The median premium paid by Insureon customers is $900 per year for an umbrella policy. Similar to other coverages, the rates vary by industry. Businesses in the building design industry paid the highest premiums of $ 1601, whereas personal care companies spend $ 478.