As a contractor, ensuring you have contractor business insurance is essential to ensuring that your business is protected. This means that you need to account for insurance premiums as part of your overhead costs instead of considering them an optional expense.
To do so, however, you must first have an idea of how much your insurance will cost you. Unlike many of your fixed overhead costs, there is no set price for insurance coverage. It is dependent on various factors and is different for each business. Where your company stands in relation to these factors will ultimately determine how much your insurance premiums are. These factors include:
The Type of Business You Own:
This is perhaps the most significant factor when it comes to establishing a business’ premiums. Each industry carries with it its own inherent set of risks, and premiums reflect that reality.
For example, if you have a construction business, you have a higher chance of filing a contractor business insurance claim for workplace injury than if you have an accountant business.
Also, your premium will depend on the details of your unique business. If your business model requires you or your employees to enter a customer’s home, for example, your risk will be different than if your model had clients coming to your office. This will affect your premiums as well.
Your Level of Expertise:
Do you have experience in your industry?
If, as a business owner, you have years of experience, you are likely to have lower premiums than if you are starting a new business with no job history in that sector. So, for example, if you start your own handyman business after years of working as a handyman in another company, you will have lower premiums than if you start a handyman business with a history of work as a handyman.
This is because the more experience you have, the lower the risk that you are presumed to have — the lower the risk of any business, the lower the premiums.
The Location of Your Business:
Insurance costs can differ from city to city and state to state. Even within a city, the physical location of your business or offices can affect your premiums. For example, if your business location is in a flood zone, your premiums will be higher.
Similarly, the age of the building your business is located in can affect your premiums. Older buildings are less likely to be up to the most recent codes than newer buildings, leading to you having a higher presumed risk, and increased insurance costs.
Your contractor business insurance premiums are dependent on a variety of factors. Choosing your insurance policy based purely upon premium costs can lead to you being underinsured, which can bring with it its own set of problems.
Instead, choose a policy that reflects your needs and levels of risk. This will help ensure that should something unforeseen happen to your business, you have an adequate safety net to fall back upon.
Who should I contact to discuss my contractor business insurance?
If you’re looking to discuss your contractor business insurance and premium rates, you can contact Farmer Brown Insurance on (888) 973-0016.