You’ve started a small business and want to make sure it is protected. But how much will it cost to buy insurance that will cover you for potential property damage, liability lawsuits, or other issues that come up along the way? That will depend on a number of factors:
How much you pay for insurance depends on what type of business you run. The higher the risk, the more you’ll pay. For example, janitors, construction workers, and manufacturers often have some of the highest rates for general liability insurance, because they deal with (and could potentially damage) other people’s property. Your liability risk matters as well. For example, the risk of incurring liability for physical injury to third parties is likely greater for a business that performs security services than for a business providing accounting services.
There are obviously greater risks for property damage in high-hazard flood zones than in places where weather-related incidents are less likely to occur, and insurance premiums often reflect the different level of risk. You can take certain steps to reduce risk for property damage from natural catastrophes, but if your business is located in a high-hazard area, the cost of your property insurance is likely to be higher than it might be in other locations.
The type of occupancy does affect your business insurance premium. If you rent space for a restaurant, you’ll likely pay more property insurance premium than if you run a real estate business from a rented space because the risk exposures from restaurant equipment are greater than risk exposures in a general office environment.
Insurance companies will also look at your claims history, if you have any. For example, if you’ve been sued for mistakes you’ve made in providing services, an insurer may consider this a trend that will continue and charge higher premium for the higher risk presented. Or, if you claimed for any property damage which will likely be reoccurred, then you may have to bear a higher premium.
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Disclaimer - All contents of this article are intended for general information/guidance purposes only and not intended to be an offer or solicitation of insurance products or personal advice or a recommendation to any individual or business of any product or service. This article should not be relied on for legal advice or policy coverage and cannot be viewed as a substitute to obtaining proper legal or other professional advice, or for reading the policy documents. You should read the policy documents to determine whether any of the insurance product(s) discussed are right for you or your business, noting different limits, exclusions, terms and conditions apply in each country or territory, and not all cover is available in all countries or territories.
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