Tag: General

3 Factors Affecting Your General Liability Insurance Rate.

Many business owner’s and managers frequently wonder what goes in to their General Liability Insurance Rate for their small business. Many compare their costs with fellow business owners or friends and family who run other businesses. Depending upon your industry, this may cause some shock when they find out how much more they pay than other businesses in different industries. Every state and every insurance company determines their own way to determine your businesses General Liability Insurance Rate. There is not one set in stone way to determine how much to charge for coverage.  There are three main factors that weigh heavily on what you pay for General Liability Coverage: The size, the class code and the loss history of your business.

Find tips to positively impact your general liability insurance rates at My Insurance Question.com

The size of your business

For most businesses this is the physical dimensions of your property times a number determined by your classification code. The condition and age of your property mean a lot for this rate as well.  Underwriters will examine the age and complexity of the construction.  Whether the building is up to code means a lot to the insurer. Generally, newer construction lowers your rate, while older construction tends to raise your businesses General Liability Insurance Rate.

Class Code

General Liability Insurance Class Codes are determined by the activities your business partakes in. In order for this to be accurate, it is important to be honest with your agent about everything your business does and does not do on a daily basis. You can understand the differences in risk from a accounting office compared to a rooking business.  Even small differences in a business can have an effect on your class code.

Take for instance commercial versus residential cleaning businesses. Commercial cleaning businesses typically have employees who drive to one location, clean the building and go home. A residential cleaning business typically has employees who are going to more than one residence throughout the day. These employees are driving to and from each residence. While driving between locations, the business is liable for any accidents that occur. This elevates the risk for covering this business and will in turn cost more. This is why it is very important for you to speak long and honestly with your agent in order to be placed in the proper class code.

Loss History

The final factor that impacts your general liability insurance rate is your businesses loss history. This depends upon the industry and the operations of your business. For some industries, it is common to have many small accidents. A restaurant is be a good example of a business that might have a lot of small occurrences. This is because the frequency and amount of customers coming in and out of the restaurant.  Slips, trips and falls are common in these industries. If your business tends to have a larger amount or more severe incidents during a recent year, it may cause your rate on premium to go up. Another thing to consider if you have had some claims in the recent past is what type of formal safety program does your business have in place. If you have a well documented safety program in place, your agent may be able to explain some incidents as freak occurrences and not a sign of an underlying problem that makes your business more of a risk.

There are several other factors that go in to what you pay for your General Liability Insurance Rate, but the size of your business, your class code and your loss history are the main factors that determine what you pay. Staying on top of these three factors can go a long way towards preventing your business from paying too much for General Liability Insurance.

General Liability Insurance

General liability insurance protects a company’s assets and pays for obligations. For example, it covers medical costs incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees. Liability insurance also covers the cost of your legal defense and any settlement or award should you be successfully sued. Generally, these include compensatory damages, non-monetary losses suffered by the injured party, and punitive damages. General liability insurance can also protect you against any liability as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss. Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.

General Liability Insurance

Getting liability insurance is a wise investment that doesn’t cost much – annual premiums could range from $425 and up on your line of business and coverage needs. That’s certainly a lot less than the thousands, if not millions, of dollars you may need to spend fighting your case in court. General liability insurance can be purchased on its own, but it can also be included as part of a Business Owner’s Policy (BOP) which bundles liability and property insurance into one policy. If you have a BOP, check it to see what your liability coverage limit is. You may find that it is quite low, in which case you may need additional coverage through a separate policy. There are specific liability products catered to contractors that you can add some tools and equipment coverage making it into a BOP that costs the same if not better than just getting liability coverage by itself. The coverage you need depends on the type of business you are in and the perceived risk associated with it.

How general liability insurance works is the same as many insurance plans, your general liability policy will outline the maximum amount the insurance company will pay against a liability claim. So, if your small business gets sued for $250,000 for medical costs associated with an injury caused by a worksite hazard, plus an additional $100,000 in legal fees, but your coverage maxes out at $300,000, then you are responsible for paying the difference of $50,000. If you are on the higher end of the risk scale and already have general liability insurance, you can also opt for umbrella insurance that increases your coverage limits. This will cover you in situations in which you’re worried that your existing coverage won’t cover all your costs should someone file and win a claim against you. The most commonly asked limit we have found is $1,000,000 per occurrence with a $2,000,000 aggregate.

Find out if your business needs a commercial umbrella policy at myinsurancequestion.com

 If an incident occurs that may lead to a claim, you should notify your insurance company or agent immediately. Be prepared to explain what has happened in detail including the time, date, the names of any witnesses, and any other pertinent information.

Remember General Liability Insurance just like all other kinds of insurance are designed to help you in a time of need. Make sure you review your policies with your insurance agent on a regular basis.  This can help you make sure you are up to date on coverages and that you have the limits that best suit your business. This is important because your business has probably changed a great deal from the first time you took a policy out when you open your doors.