If you are considering taking the leap to small business, there are many things to keep in mind and insurance is truly one of them.
Not only that, but since most small businesses have limited start-up money, the cost of insurance is quite important. This article will give you some tips to help you understand how the cost of general liability insurance for a small business is calculated.
But first let's define some terms that help us …
What is general liability insurance?
When most people think of Ohio business insurance, general liability insurance is the first thing that comes to mind. In its simplest form, the general liability insurance covers the legal liability of an insured for bodily injury or damage to property to others arising from the business premises or the business (ongoing and discontinued operations). "To others" is important here. It does not cover bodily injury or property damage to an insured, employees or an insured property.
Factors that help determine the cost of a general liability insurance for a small business
General liability insurance Cost factor 1: Type of business
A small gift shop or shop will generally be cheaper than a specific contractor . The reason is simple: a small gift or retail store is low risk, while there is a greater risk of bodily injury or property damage to a contractor – they are mobile, do more dangerous work, around more people, you get the idea. So the type of business you open will have a big impact on the cost.
General liability insurance Cost factor 2: Operation size
General liability insurance is valued based on a number of items (depending on the type of business). So for example, a restaurant can be rated based on annual sales. A restaurant with $ 250,000 in sales will be a lower premium than one that has $ 750,000 in annual sales.
General liability insurance Cost factor 3: Place of business
If your company is located in an area with high traffic (either pedestrian traffic or just one more urban environment), there is a greater chance that the premium will be higher than if your company is located in a more rural environment with low traffic.
General Liability Insurance Cost Factor 4: Your Experience
The length of your business and your financial stability can easily affect your premium.
General liability insurance Cost factor 5: Coverage amount
The more coverage you have, the more premiums you pay. So you can expect to buy a $ 300,000 insurance policy that costs less than $ 1 million in insurance. That being said, there is often a small difference in premium between the lower limit and the higher, so it's worth checking out.
General liability Insurance cost factor 6: The insurance company's rules
Most insurance companies have a minimum premium that they charge to even issue an insurance policy. So for example, a typical annual minimum liability policy for general liability insurance is $ 500. Your small gift shop may only generate $ 20,000 in sales, but you still pay $ 500.
If you are a small business owner or someone who may have just started, it can be confusing and difficult to find out what insurance you need and even what it entails. General liability insurance is usually the first type of business insurance you need. Although the cost is unique among companies, the six factors mentioned above help to provide an idea of how general liability insurance costs are calculated. To get a liability insurance quote that is unique to your business, call or click today!