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General liability insurance is essential for your business because it protects you from various personal and professional liabilities. These include property damage, personal injury claims, and bodily injuries that occur on your property. Various factors can determine the cost of general liability insurance premiums. Consider the following ways general liability insurance may be based on payroll and other factors that may influence your premiums.
Payroll Influence
Although your general liability insurance costs aren’t completely based on your payroll, it can be one of the primary factors commercial insurance providers consider when determining your premium rates. The reason for this seems to be based on the fact that if your business has a larger payroll, it stands to reason that you have more employees. Because of this, you may be more likely to submit more claims than a business with a smaller payroll and fewer employees because you have more employees who are exposed to more situations with the potential to cause on-the-job accidents that could heighten the risk for liability claims.
Business Categorization
In addition to your payroll’s influence on your premiums, insurance carriers may also categorize your business by using special classification codes. The category your business is in will help insurance carriers determine your premium. Certain categories and codes are associated with higher liability risks. However, if a company has a higher payroll, its insurance premiums may be more expensive than a smaller business, such as a local grocery store with a smaller payroll, even if their classification codes are the same.
Other Contributing Factors
In addition to your payroll, other contributing factors may influence your liability premiums, such as the location of your business, because certain states may have higher or lower levels of risk. Location may also play a role in your premiums because each state has different rules and regulations concerning insurance rates. If you live in a high-risk location with a high crime rate, you may pay higher insurance premiums. In addition, the amount of coverage you need will also affect your premium. If you choose a policy with higher coverage, you’ll probably pay more for insurance premiums than if you chose a policy with lower coverage or a higher deductible.
Minimizing Insurance Premium Costs
Even if your business has a higher payroll, there are still ways to minimize your liability insurance premium costs. For example, your business could implement safety and risk management programs to lower the risk of occupational accidents and injuries. These programs can reduce claims as a result of fewer on-the-job incidents. Choosing a higher deductible and decreasing your insurance coverage can also reduce your premium, as can working with a reputable broker and getting multiple insurance quotes from different insurance carriers.
Business owners need to make sure they protect their companies, customers, and employees by purchasing the right insurance coverage. For affordable, reliable commercial insurance as well as homeowners, renters, motorcycle, and auto insurance San Diego residents should call on the trustworthy professionals at Altra Insurance Services. Reach out to us today at (619) 404-6311 to learn how we can satisfy all your insurance needs.