5 Factors That Affect Umbrella Liability Insurance Costs

Umbrella liability insurance costs can seem daunting for many business owners. However, they often justify the cost by the coverage they receive. As a business owner, you should know that umbrella liability insurance protects both you and your company’s assets. Unlike other insurance policies, it increases your protection levels by adding to all of your other policies. It acts as an umbrella would on a rainy day. You might wear a raincoat and still need an umbrella because your jacket lets some water in. Protect your business in the same way by getting umbrella liability insurance. Read this post to discover the main factors that affect umbrella liability insurance cost for business.

Credit Score

One of the factors that directly impacts umbrella liability insurance cost is credit score. Similar to other insurance policies, umbrella liability insurance rates rise for businesses with poor credit histories. If you maintain a positive credit score for your company, you could decrease your rates substantially. Simply provide your credit records to your insurance company and request a quote based on them and the other factors in this list. Check your annual credit report to find out if you are in good standing. If you do not have a good credit score and fear that you could receive an non-affordable quote, take steps to improve your credit score. After all, it does directly impact umbrella liability insurance cost.

Business Industry

Another factor that directly impacts umbrella liability insurance cost is the industry you conduct business in. Insurance companies offer businesses in certain industries lower umbrella liability insurance rates. They base their industry-specific rates on the risk of the work. For instance, construction companies perform their duties at a high risk on a daily basis. They deal with liability claims as well as injuries and property damage regularly. It is much more likely for business accidents to occur on a construction site than in an office setting. Insurance companies realize this and take it into consideration. Keep this umbrella liability insurance cost factor in mind when applying for coverage.

Amount Of Coverage

Additionally, the amount of coverage you want out of an umbrella liability insurance policy makes a difference in cost. Some companies require more coverage due to the work that they perform. These companies have more current insurance policies, which means that they need larger umbrella policies to provide enough coverage. Consider a business that functions with commercial auto insurance, general liability insurance and employer’s liability insurance among other policies. Construction companies even add independent contractor insurance to the mix. They will pay a much higher premium than a company with only one or two underlying policies. Thus, coverage amount plays a role in determining insurance cost.

Business Size

Business size affects umbrella liability insurance cost for business as well. Businesses that have over 100 employees require more coverage. Hence, they need to pay higher premiums. In contrast, small companies with just a few employees likely do not need as much coverage from an umbrella liability insurance policy. Keep in mind that some insurance companies qualify “large” companies as ones with up to 10 staff members. Others consider businesses with up to 50 employees as “large” businesses. Read the fine print to calculate what your premium will be for umbrella liability insurance coverage.

Your Net Worth

Finally, your net worth impacts your umbrella liability insurance cost. The best insurance companies offer business owners policies that equal their net worth. However, some also offer policies that are greater than business owners’ net worth. If you are not sure what your net worth is, hire a professional to assist you in determining it. Then, you can ensure that you choose the fairest policy. Many business owners work with lawyers and financial advisors for top-notch advice on the net worth-umbrella liability insurance cost relationship.

Contrary to popular belief, you can easily determine a fair insurance cost for your business. Understand that poor business credit history negatively impacts your rates. The business industry that you operate in also affects insurance costs because certain businesses work in higher risk industries. Businesses that need more umbrella liability coverage for their underlying policies pay higher premiums. Since larger businesses need more coverage, they pay more for this type of insurance. Lastly, your net worth impacts your insurance rates as well. Consider these factors to ensure that you pay a reasonable umbrella liability insurance cost for business.