5 Factors That Contribute To Business Owners Policy Insurance Cost

There are several factors that contribute to business owner’s policy (BOP) insurance cost. This packaged commercial insurance policy allows you to have one minimum premium for the whole policy rather than on each separate coverage. As an upcoming small business owner, you will receive commercial general liability. This protects you from claims related to injury resulting from day-to-day operations, property damage, financial loss from advertising, medical, and defense. In addition, you will also receive commercial property insurance. This covers damaged property caused by environmental hazards. Typically, small businesses in low-risk industries are eligible for business owner’s policy insurance. In this post, you will read about several significant factors that contribute to BOP insurance cost.

Industry Risks

The risk of your industry significantly impacts your business owner’s policy premium. A high-risk industry tends to pay higher rates. On the other hand, low-risk industries enjoy lower premiums. For example, a busy restaurant is exposed to more risk of customer injury than an accounting firm working remotely. Typically, food and beverage industries have the highest cost because they have the highest consumer risks. The construction and retail industries also have higher BOP insurance costs because they have expensive equipment and increase third-party liability. Your business’s industry risks greatly affect the cost of your commercial insurance rates.

Additional Coverage Options

Another factor that affects your business owner’s policy insurance cost is additional coverage options. Depending on your business, you may choose to have other coverages factored into your BOP. For instance, if you have a company vehicle, you may add business auto coverage to your plan. You also may want to cover crimes such as robbery, forgery, or fraud. Crime insurance is another additional coverage option to add to your insurance plan. These different coverages increase your rates depending on your provider’s cost specifications. Additional coverage options are important to consider when you are filling out the Acord form for your BOP insurance application.

Number Of Employees

Although you are operating a small business, the number of employees is still factored when calculating BOP insurance rates. To qualify for business owner’s policy, you are required to have fewer than 100 employees. With that being said, the more staff you have, the greater the risk of theft and liability lawsuits. Because employee injuries are not covered in business owner’s policy insurance, more employees entail a higher risk. Therefore, the number of employees is another critical aspect in calculating your business’s insurance policy cost.

Claims History

Moreover, claims history can also contribute to your small business insurance rates. Your claims history reflects your company’s risk in insurer’s eyes. More claims are equivalent to higher risk. This means that it will cost more to cover your company. A business owner’s policy is one way to reduce costs because it bundles your coverages together. Still, it is recommended to discuss your business’s specific claims situation with your insurance agent. This way, they can directly address your coverage needs without compromising your workplace safety. The history of your business’s claims is directly associated with risks, so it greatly contributes to your insurance rates.

Geographical Location

Furthermore, your business’s geographical location greatly contributes to the of cost your business owner’s policy. Every region has its own local laws and regulations that regulate business in that area. In addition, every region comes with its own geographical risks. For example, consider business in a location with high flood risk. They are going to have a higher cost than a company located in mild weather climates. Generally speaking, the east coast has higher geographical risks than the midwestern United States because they experience more drastic weather phenomena, such as nor’easters and tropical storms. Providing services at a location that is off of your commercial property can also increase insurance rates. Geographical location can have a sizable contribution to your business’s insurance fees.

There are many considerations that contribute to your business owner’s policy cost. Perhaps the most influential is your business’s industry. Utilizing a BOP, you can streamline claims management efficiency. Depending on your company’s needs, additional coverage options are also factored into your premium rates. In addition, the number of employees you have also affects your insurance rate due to liability. Furthermore, claims history impacts your insurance cost due to its risk association. Geographical location comes with its climate hazards that impact your business insurance charges as well. Consider these contributing factors when applying for your business owner’s policy insurance.

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