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How expensive is business insurance

Which Business Industries Are the Most and Least Expensive to Insure?

June 18, 2012

When shopping for business insurance, while there are some business industries that can be somewhat expensive to insure, there are other business industries that are far less expensive to insure. The main factor that determines how expensive your business will be to insure is the type and nature of your business. It also depends on what type of insurance you trying to obtain. Businesses that are in industries with high levels of risk will typically be more expensive to insure that a business in industries with low levels of risk.

Type of Insurance – Some of the different types of insurance you might need for a business include property and casualty insurance, liability insurance, and worker’s compensation insurance. Within these types of insurance, the safety record, number and amount of past claims, and amount of coverage being sought are factors that increase or decrease the cost of insurance.

  • Liability Insurance – The level of risk involved in your business and its operations greatly impact the cost of liability insurance. For example, a business that specializes in demolition is going to carry far greater risk of injuring its employees and people nearby. Another example is if a business is primarily an office atmosphere, the risks to its employees and people nearby are inherently low. Higher risk means higher premiums.

  • Property Insurance – The nature of a business and the specifics of the business premises heavily impact property insurance rates. If a business specializes in retail sales, there are not many large risks to property. Conversely, if a business specializes in manufacturing or working with chemicals or substances that greatly increase the risk of a fire or explosion, there is a great risk to the property. The high risk of a fire or explosion makes the cost of property insurance very high. Additionally, if the business’ premises have very high value contents, the insurance rates will rise accordingly.
  • Safety Record – The safety record of a business is also a large factor in the price of workers’ compensation insurance. Workers’ compensation insurance provides coverage to pay for employees who are injured while working, so industries that are more likely to have injuries and businesses with poor safety records will have much higher workers’ compensation premiums than low risk industries or companies with good safety records.
  • In looking at liability insurance, property insurance, and workers’ compensation insurance, businesses industries that will be the most expensive to insure include: demolition, construction, mining, and manufacturing. The business industries that will be the least expensive to insure are business offices that provide a service such as an accountant, retail businesses with a small number of employees, or a home-based business such as selling products or software online.

    Category: Insurance

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