What factors about your business could increase what you pay in commercial insurance?
As a business owner, ensuring the security of your business and managing operating costs are often two of the top concerns churning in the back of your mind as you work to establish and grow your business in southern Ontario.
There is no clearer instance of when these two concerns come together, than when you are considering options for business insurance. We all want the best protection available at the lowest cost possible but knowing what factors will contribute to you paying higher business insurance rates will give you a stronger understanding of the process.
Here are several common risk factors that lead to you paying higher business insurance rates:
MORE LIABILITY RISK.
This is likely the simplest and most obvious example. The more likely it is for a business to suffer loss means an increased risk for an insurance company to cover a business resulting in you paying more to get the coverage you need.
However what defines more risk can vary. Examples include:
- Number of locations.
A business with 2 locations compared to a business with 1 location almost always pays more towards business insurance. Twice the locations usually mean twice the risk (but not always twice the rate, contact us for a business insurance quote for more specifics). - Amount of physical traffic.
If you operate a business with a significant amount of foot traffic in and around your location, you will likely pay more towards insurance. A lot of customer visits is certainly a blessing, but it also exposes you to more risk including an increased chance of customer injury or theft, usually resulting in higher insurance rates. - Type of equipment.
Most owners require at least some equipment to operate their business which all needs to be covered by insurance in the event of fire, injury to staff and customers or theft. For those who utilize larger and sometimes more dangerous types of equipment, special considerations will need to be made to ensure the business is properly covered.It is not a stretch to imagine that a brewing business with several industrial sized tanks and a full-scale packaging line may pay higher insurance rates due to their equipment in comparison to an accounting business that uses little more than computers and other small office appliances.
MORE REVENUE.
Much the same way that high foot traffic in a store can lead to increased insurance needs, so too can increased revenues. This blessing also comes with the downside of making sure everything is covered. More revenue typically means more sales, customer interactions, transactions, employee activity and equipment usage. All of which can lead to increased exposure and higher premiums.
SALES MADE OUTSIDE OF CANADA.
If you are a business owner in Canada who conducts a portion of your business across the border you should be expecting to pay higher insurance premiums. Physical border crossings, shipments and the variables that come with dealing with multiple types of government and regulations all contribute to increasing your risk and exposure.
In fact, there are sometimes different rules and considerations based on specific US states that can affect whether you can or cannot even obtain coverage from a Canadian insurance company or whether you need to seek a specialty market across the border. Likewise, some Canadian insurers may choose to shy away from accepting any risk with US sales or may limit how much they are willing to accept as a percentage or dollar volume of your total sales.
Some of these contributing factors for higher business insurance rates may be unavoidable for some owners. However, now that you are better aware of what these factors can be you can make sure they are at least considered when deciding to take your next leap.
Erie Mutual Insurance proudly serves the commercial insurance, farm insurance, home insurance and auto insurance needs of members throughout Southern Ontario including Haldimand, Niagara and Hamilton.
Please don’t hesitate to contact us with any questions you may have about this or any other topic related to your insurance.
