Factors That May Affect General Liability Insurance Coverage

Most business owners are aware of how important it is to have General Liability Insurance to protect their company and their bottom line. Where you purchase your business insurance is important, too.

For instance, if you buy from an insurance agent who has allegiance to one particular insurance company, you will only be offered General Liability Insurance policies from that one source. On the other hand, if you choose to seek help from an experienced insurance broker who works for a well-respected firm, you will have many more options. In addition, the broker will be able to assist you in comparing and contrasting the services and costs of competing companies. This will give you the best chance of getting comprehensive coverage at a cost-effective price.

A capable insurance advisor will also provide you with pertinent details about each policy and each insurance company.

What factors affect General Liability Insurance policies?

While there will definitely be individual differences between them, all insurance companies will base their rates for your General Liability insurance on a number of factors, including:

  • Company size. Generally speaking, the more employees you have, the more insurance protection you’ll need so the more it will cost.
  • Location. If your business is located in a high-crime area, for example, your rate will likely be higher.
  • Size and physical condition of your building. The larger the building, the more room for accidents and damage. If the structure in which your company appears to be in need of repair or if it is not up to code, your rates will be higher. Most of the time, a newer building will lower your rates. Lack of accessibility (e.g. in order to put out a fire) is perceived as putting your business at higher risk of filing an expensive claim.
  • Type of work your company does. Clearly, there is a greater possibility of injury at a construction site or a business that routinely uses heavy and/or hazardous machinery

or vehicles. You can count on insurance providers to regulate their prices for General Liability insurance accordingly. If you run a more sedate business, such as a consulting firm, your rates will typically be lower.

  • How many third parties frequent your premises? Insurance companies will take note of whether or not your workplace is open to the public and of how often visitors, such as customers, clients, vendors, and service providers come and go. Heavier foot traffic is considered to elevate the risk of personal injury claims.
  • Years in business. Insurance providers feel less vulnerable with clients who have been in business for a number of years. Companies with a history appear to be more stable financially and more likely to keep up with their premiums, although not if their structures are in disrepair. Insurance providers are also pleased to have experienced personnel in the company who are less likely to make serious, dangerous mistakes.
  • History of previous claims. Though it may feel unfair, insurance companies will also take note of any insurance claims your business has filed in the past. Though a single claim may not make a major difference in your premiums, insurance providers would always prefer that your past is a clean slate when it comes to insurance claims.
  • Deductibles. The higher the risk you take by agreeing to pay a higher deductible, the lower your premiums will be. In insurance matters, it is always a question of how much risk you are willing to take and how much protection you are willing to pay for. A good insurance advisor will help you sort it out.

The Takeaway

Hopefully, this content has been informative about the many and varied factors that can influence the rate you pay for General Liability insurance coverage. A skilled insurance broker can help you balance the costs and benefits of a number of policies so that you find the one that best suits your company and your profit margin.

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