Business Liability Insurance: Why Are Your Rates So High?Whether your grand opening was way back in the last century or is it this weekend, it’s important that your business is fully covered.
But maybe you are asking yourself,” Isn’t insurance super-expensive?”. Our assumption:” it doesn’t have to be.” Where do we know that?
Because most insurance company’s number crunchers start reviewing a list of different risk factors that usually vary from one business to another (things like location, size, etc.)
There are various insurance agencies where you can shop and compare policies from a wide range of carriers to find the coverage that suits you. That means price and protection. And because no two businesses are alike, they’ll make sure your unique needs are loaded, locked, and ready for whatever may come.
Why do I need Business Insurance?
Business insurance is a contract between your insurance agency and your business that basically states that you will pay your premium, and the insurance agency will help repair, replace or recover your business’s covered possessions if they are ever stolen, lost, or damaged.
Think you may need it? Think again. Coverage is essential if you want to protect your small business from all sorts of bad things that happen nearly every day, such as:
- Legal things: In the event of harm caused to a third party by your services/products
- In case of damage or theft
- Oopsies: In the event of a professional mistake that causes destruction/harm.
What kind of Business Insurance Coverage Do I Need?
Owning a business is a truly rewarding experience, but it can also be a real nail-biter if you’re always a bit worried.
To put your managerial fears to bed, you will need to discuss your specific business needs with your insurer. But if you take your time to compare different business insurance quotes, here’s a few of the basic you will cover:
- Liability coverage: This will protect you if you’re prosecuted. It doesn’t matter if you’re a bubble wrap factory or a beauty salon; one accident could financially cripple you with legal fees and medical bills.
- Property Insurance: This coverage will protect your business building and its content, whether it’s from a natural disaster or an employee mistake.
- Worker’s Comp: This coverage ensures your business complies with the law. Your employees will be covered in case of illness suffered due to work or injury on the job.
If I were to choose Liability Coverage, what factors will influence the cost of my plan?
Most business owners choose to invest in general liability insurance, which protects the company assets of small businesses in the event of being sued by a third party (which can be anyone outside your business). The general liability policy can help you cover legal costs, as well as any award or settlement if your small business is sued.
The general liability policy typically covers claims arising from the operations or activities of small business such as:
- Property damages
- Bodily Injuries
- False advertising
- Libel and slander
Additionally, the general liability policy covers legal costs such as punitive damages, compensatory damages, legal defense costs, settlements, and non-monetary damages. You can also opt for non-trucking liability coverage for your commercial truck for occasions in which it is used for personal matters like personal errands. In general, liability insurance covers such claims whether they are filed through a class-action lawsuit or by an individual.
Why is General Liability Insurance So Expensive?
As we’ve previously mentioned, when the insurance agency is checking off their list to estimate your rate, they’re evaluating things like:
- Your business’s type (corporation, sole proprietorship, etc.)
- Your business’s services and goods
- Your business’s salary total
- Your business’s day to day activities (what your workers do when they’re not checking their email)
- Your business’s stuff (equipment, buildings, vehicles, and supplies) and their values
- Your business’s risks (tornado chasing, heavy lifting)
- Your business’s location
- Your business’s sales reports
To put it simply, the cost of your coverage will depend on what your company does and how much of it you do. Here you add the type of operation you run, the several types of coverage you may need to purchase (if you have a trucking business, you will need to get bobtail insurance or commercial auto coverage).
Here are a couple of fun examples if you’re a starter:
- A large gas business based in Toronto that owns trucks and wells has several locations as well as tons of workers might pay more than $10 million/year for coverage.
- A tiny beauty salon nestled on a corner of quiet downtown stress would need a combination of liability and property coverage, which might turn at about $1,200/year. If they had supplementary employees and needed employee compensation, that aspect of the insurance might add another grand on top of that.
Perhaps you don’t consider there’s much risk in your service or product and don’t think you will ever be sued. However, it would help if you also considered we live in a very litigious society right now – a society where fast-food restaurants are being sued for serving hot coffee too hot, not to mention many years ago, businesses did not get sued unless there was a real loss. Today businesses are sued regardless of fault.
As a business owner, it makes sense to look at your costs, but you also have to look at protecting your business.
While there really are no average business liability coverage costs for both large and small businesses, we recommend connecting with an independent insurance agency to compare rates. Why? Because comparing policy rates on your own can be difficult, not to mention there’s a lot to digest. Here’s where an insurance agent intervenes- they’ll know everything important to consider when comparing rates.
An independent insurer can make your business life more bearable. Since they’re not tied down to one insurance agency, they’re free to compare, shop, and assemble all the pieces of the coverage puzzle for you.