Commercial insurance, in general, tends to be more of an investment than other types of insurance. Even so, you may have noticed an increase in rates compared to what was average just a year or so ago. A combination of both unique and evergreen—ones that always apply—factors ultimately play a role in what’s common with commercial insurance rates. We take a closer look at this topic below and offer tips on what you can do to keep costs in check.
Supply Chain Shortages & Generally Higher Costs
As for why your commercial insurance rates may be higher now than what you paid around this time last year or the year before, the reason is largely issues with supply chains coupled with higher overall costs. Plus, it often takes longer to replace things that can be damaged in a business.
For example, windows are among the items in short supply right now. If windows in your business are damaged, it will likely take a while to get new ones, and the shortage also means you’ll pay more for those windows. In turn, this translates into higher overall replacement costs. If the items and materials covered under your commercial policy are generally more expensive to get now, this fact is more likely to be reflected in your rates.
There are some more evergreen factors that can affect commercial insurance rates at any time. One of these is the location of a business. Typically, businesses in more crowded urban areas have higher commercial insurance costs. This is more likely to be the case in areas with greater risks, such as higher crime rates. Part of the reason rates go up in such locations is because insurance companies prefer to minimize risks. Therefore, if a business is more likely to have significant damage or losses, rates will reflect this fact.
Industry Risks & Other Factors
Risks related to the nature of your business also play a role in commercial insurance costs. If your business falls into what’s considered a riskier category, you’re likely to have higher rates. For insurance purposes, higher-risk industries typically include:
• Agriculture, forestry, and fishing
• Anything involving transportation
• Construction and manufacturing
• Electrical work and industries
In addition to location and industry risk, some other factors could be making your commercial insurance costs higher than what’s average. These include:
• How much coverage you need
• The overall size and scope of your business
• Whether or not you need or want to add coverage that’s not required
Lowering Your Commercial Insurance Rates
One option is to bundle your coverage, so ask about package options. For instance, a business owner’s policy is often packaged with general liability and commercial property coverage. Additionally, it’s often possible to add other types of coverage into the mix, which may further enhance your savings. Other ways to keep commercial insurance costs in check include:
• Paying your premiums in advance
• Eliminating or consolidating unnecessary or overlapping coverage
• Increasing your deductible
• Proactively taking steps to mitigate risks associated with your business (e.g., installing high-tech security cameras)
Business owners need to make sure they protect their companies 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.