Restoration Insurance: What Factors Go Into Calculating My Premium

February 9, 2017

 

Pricing a general liability policy is a balancing act. The insurance company has to assess how much risk they are taking on by covering your business. And to make an accurate evaluation, they need to know more about your company, its operations, and where its potential vulnerabilities may lie.  So what factors do they evaluate for restoration contractors?

 

General Liability Price Factor 1: Operations

When it comes to risks, not all restoration contractors are created equal. For instance, contractors that take on asbestos or mold remediation are usually considered “high risk,” whereas contractors specializing in just basic cleanup are typically categorized as “low risk.”

 

General Liability Price Factor 2: Size and Condition of Your Business Premises

One of the primary functions of a General Liability policy is to protect your business from the cost of premises liability claims. So it makes sense that the price of your coverage would be influenced by the size and physical condition of your office building or commercial location.

 

For example, larger premises mean more places where slip-and-fall injuries can happen, which can raise your rates. As for the condition of your property, insurers examine the age of the construction and whether the building is up to code. Generally, “newer” construction lowers your liability rates, whereas older construction with a lack of accessibility can raise GL rates.

 

General Liability Price Factor 3: Experience in Your Profession, Field, or Business

Don’t be surprised if your insurance application asks about your years of business experience and your company officers’ professional expertise. Your business’s longevity and financial stability can lower your premiums.

 

General Liability Price Factor 4: Number of Employees

The more employees you have, the more chances that they could accidentally damage someone else’s property (which is a liability that GL covers). Say, for example, an employee spills coffee on a client’s laptop. That client could sue your company for replacement or repair costs.

That’s why your premium will typically be higher if you have more employees. Your application will typically request a breakdown of full- and part-time employees, as well as the number of subcontractors or consultants you employ so your provider can asses your risks accurately.

 

General Liability Price Factor 5: Limits and Deductibles

The higher your coverage limits, the more your policy will cost. (You can keep your General Liability limits reasonable and draw on extra coverage when you need it by purchasing an Umbrella Liability Insurance policy.) As for your deductible (i.e., the amount you pay before your insurance benefits kick in), remember that higher out-of-pocket spending will lower your monthly premium.

 

General Liability Price Factor 6: Claims History

A previous claim doesn’t necessarily mean your General Liability premium will be higher, but there is a good chance it will influence your quote in some capacity.

Ultimately, your provider and the nature of the loss will determine the extent of the impact. Many carriers evaluate claim histories on a case-by-case basis.

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