The cost of business insurance can be confusing when it comes to small businesses.
Small business insurance pricing often feels hidden or worse like it’s constantly changing after you purchase a policy.
At Rogue Risk, we believe insurance provides the foundation upon which small business owners are able to take the risks necessary to grow their business.
When you buy business insurance you are transferring the risk of hiring employees, buying another building, taking on a new client (as examples) to the insurance company in exchange for the cost of insurance.
So the question shouldn’t be why does it cost so much, but rather am I paying too much for the insurance I need?
Watch the video below or keep reading to find out…
Business Insurance is confusing, time-consuming, and costly.
We fix these problems.
Why Does Small Business Insurance Cost So Much?
To answer this question, why does small business insurance cost so much, first, we acknowledge that “So much” is a relative term.
What is expensive to one business may just be the cost of doing business to another.
That being said,
“the cost of your business insurance is relative to the amount of risk that is involved in your business, not the size of your business.”
This is a fairly common misconception.
The insurance industry over almost 400 years now has an incredible amount of data, an incredible amount of data on what types of businesses get hurt, cause injuries, have claims, everything from commercial auto and auto accidents to people falling off roofs and roofing contractors or tree service businesses.
If you have a standard accounting office risk, you run an accounting firm, it’s highly unlikely that someone is going to have a physical injury in an accounting firm. It happens, but very, very rare.
This is why if you were to look at an accounting firm and a roofing company, the same size revenue for those two businesses, the insurance for the roofing company is going to be significantly higher than the insurance for the accounting firm.
This doesn’t take into account the fact that the accounting firm’s major risk is in their professional or errors and omissions liability insurance, which is ultimately going to push their premiums up as well.
While for a roofing contractor, the major risk is workers comp, someone falling off the roof, or damage being done to a house that isn’t repaired properly and then water leaks in or gets under the shingles, causes damage, (physical damage to someone’s home or someone’s building), with an accountant, the major risk is that they make a mistake on someone’s financial documents or report something wrong to the federal government or a state government.
Even though at face value their general liability may seem substantially different in price, there are other policies needed for an accounting firm that ultimately push their price up as well.
Risk Determines Cost of Business Insurance
To get to the answer, insurance’s cost is always determined by risk, and it’s based on 400 years of data.
The insurance industry has been around for a long time. And that’s really why you need to work with a brokerage that understands your business, understands small business in general, and knows where to place your insurance in terms of which carrier, which coverages, and can help you optimize your costs over time.
And that is the key, right?
If you’re doing business with someone who just wants to give you the lowest rate this year and is never going to talk to you again, ultimately, you’re going to pay a lot more.
If you’re working with a company that has the technology and expertise to overtime manage your risk and manage the carriers you’re with and your price, you’re going to keep that price lower over the long term.
That’s what we do here at Rogue.
It is why we Rogue Risk in the first place, we all grew up in the small business marketplace.
We all live in communities filled with small businesses and we want to help solve this problem with small business insurance.
If this is the kind of relationship that you’d like with your agent or if your current insurance professional has never addressed these issues with you before, then I’d encourage you to reach out to us at Rogue Risk, today.
- You can call or text us at 518.960.6600.
- Click here to contact us via email.
I hope this article helped you better understand small business insurance.