Business Insurance Saver Small business insurance costs, line by line

Small business insurance costs

Business insurance, added up line by line.

What goes into a small business insurance premium, how bundling and deductibles change the bill, and how to read two quotes side by side so the cheaper one is cheaper for the right reason.

What drives a premium Comparing quotes

The premium

What a premium is made of

Most of a premium is set before you ask for a quote. A smaller part is yours to choose, and that part is where the saving usually is.

Factor Effect
  1. 01 What the business does The work itself sets the starting rate. A bakery and a roofer carry very different risks. +
  2. 02 Payroll or revenue Often the base a rate is applied to, so the bill scales as the business grows. ×
  3. 03 Claims history Past claims tend to raise what an insurer asks for at renewal. +
  4. 04 Where it operates State rules, local costs and weather exposure all move the rate. +
  5. 05 Limits chosen Higher limits buy more protection and cost more. +
  6. 06 Deductible carried Taking on more of each claim yourself usually lowers the premium. −
  7. 07 Policies bought together A package of related cover can cost less than the same cover bought separately. −
Your premium

Lines printed in red tend to take something off.

Fixed before you ask

An insurer starts from what the business does, how large it is, where it works and what it has claimed before. Those lines are facts about the business, and shopping around does not change them. It changes how each insurer weighs them, which is why the same business can receive quotes far apart.

Yours to choose

The limits, the deductible and whether related cover is bought together are decisions. Each one trades price against how much of a bad year the business carries itself, so the cheapest setting is not always the right one.

The levers

Three keys that change the total

Each one can lower a premium. Each one also moves risk back onto the business, and the trade is worth seeing before it is made.

  • 01

    Bundling

    A business owner’s policy packages general liability and commercial property, and often business interruption cover, into one policy. It can cost less than buying each separately, and it can leave gaps if the package was built for a different kind of business.

  • 02

    Deductibles

    A higher deductible usually lowers the premium, because you carry more of each claim yourself. The useful question is whether the business could pay that amount on its worst week, not just its average one.

  • 03

    Limits

    The limit is the most a policy will pay. Cutting it lowers the premium, but a client contract or a landlord may require a minimum, and a limit below that is a saving you cannot actually take.

Comparing quotes

Run the lines before the price

Two quotes are only comparable when they describe the same cover. A lower number usually differs from a higher one on one of these lines.

  1. 01 Match the coverage types General liability against general liability, not a package against a single policy.
  2. 02 Line up the limits Per occurrence and aggregate, side by side.
  3. 03 Line up the deductibles A lower premium often sits on a higher deductible.
  4. 04 Read the exclusions What a policy leaves out is where two quotes most often differ.
  5. 05 Check the policy period Twelve months against six, and how payments are split.
  6. 06 Then compare the price Only once every line above matches.

Questions worth asking

Before the policy, the questions

  • What drives the cost of small business insurance?
  • Is a business owner’s policy cheaper than separate policies?
  • How much does a higher deductible change a premium?
  • How do I compare two business insurance quotes fairly?
  • Why did my premium go up at renewal when nothing changed?
  • Which coverage does a small business usually need first?

How it is written

Words first, figures with a source

  • No scores or starsWhere one approach costs less, it is said in words and the reason is shown.
  • No unsourced pricesPremiums vary by insurer, state and business. A figure appears only beside the source it came from.
  • No quote is a verdictA price is one line on the tape. The cover behind it is the rest of the sum.