Understanding Business Insurance Costs: What Affects Your Premiums?

As a business owner, protecting your company with the right insurance is essential. But when it comes to business insurance, one of the most common questions insurers hear is: “Why does my premium cost what it does?” The answer lies in several key factors insurers use to assess risk and determine your rate. The following may influence your business insurance premiums in the Sunshine State.

Industry Type and Risk Level

Different industries come with different levels of risk. For example, a construction company faces higher hazards than a marketing agency. Insurance premiums may reflect the likelihood of claims, so businesses in higher-risk sectors usually pay more.

Business Size and Payroll

The number of employees and your annual payroll can directly affect your premium, especially for workers’ compensation insurance. More employees typically mean a higher chance of workplace accidents, which may increase your risk profile.

Location

Florida’s unique geography—coastal exposure, hurricane risks and flood zones—plays a significant role in premium calculations. Businesses near high-risk areas may see higher property insurance costs due to the increased chance of storm-related damage.

Claims History

If your business has a history of frequent claims, insurers may view it as a higher risk, potentially leading to increased premiums. Conversely, a clean claims record may lead to discounts or better rates.

Coverage Limits and Deductibles

The more coverage you need, the more you’ll likely pay. Choosing higher coverage limits or lower deductibles will typically increase your premium, but it also gives your business more protection.

Type and Amount of Property Insured

The value and type of property you insure will also affect your costs, from commercial buildings to equipment and inventory. More expensive assets or specialized tools may require higher premiums.

Find Out More

Bundling policies, maintaining safety programs and working with a knowledgeable insurance professional can help you find the right coverage at the best possible price. Contact The Marvelous Associates to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.