Premiums are based on many factors. Basically, the insurance company uses statistics and research to figure out how great the risk is that your business will have a claim. The greater the risk, the higher the premium.

Some of the most common factors are listed below:


Property is rated on a value per $100 depending on the type of property being insured.
As your values increase your end premium will go up.

However as the amount increases there is a chance that the rate per $100 is actually reduced slightly.

What are your assets?

Take a complete inventory of all your business property. Be realistic when determining its value. If you value it for more than it’s worth you will pay more for your coverage. If you undervalue it, your settlement may not give you enough to replace it. Use this list as a starting point to develop a checklist for your own business. Make sure you include items that may be unique to you business.

  • All types of buildings (leased or owned)

  • Signs, fences, and other unattached outdoor property

  • Office furniture, equipment, and supplies

  • Cash and securities

  • Records of accounts receivable

  • Data processing equipment, including computers and software

  • Leased equipment

  • Inventory

  • Improvements you made to the premises

  • Books and documents

  • Automobiles, trucks, construction equipment, and any other mobile property (such as a portable sign)

  • Boilers

  • Machinery

  • Intangible property (such as your company’s reputation and trademarks)

  • Occupational health and safety training for employees

Make sure the items you do want to cover are provided for in the basic policy; if not, buy more coverage. If your business rents or leases space, check your coverage with your landlord. Your lease might require certain types of insurance coverage. Just because your building owner is insured, doesn’t mean it will cover any of your equipment or possessions.

Gross receipts

Gross receipts are the total amount of income before any deductions.

The amount of your gross receipts typically determines your premium for liability. These may help the Insurance company determine the number of people attending your location, or the number of products or services sold. The more you do the higher your chance for a loss.


Operations are any and all services or products that are offered by a business.

The type of operation that you do will impact the cost of insurance. A restaurant would be considered a greater fire risk than a doctors office, therefore would have greater costs for the fire portion of a policy than the doctors office. The doctor has a risk of medical malpractice that a restaurant will not and will have increased costs due to that.


Locations compromise of your physical building, other businesses in your building, and neighbouring buildings as well as their occupants.

The type of material that your building is constructed with as well as any other types of business located in the same building or in close proximity will have a bearing on your premium. A frame building has a greater chance of fire loss than a concrete building. A neighbor doing using open flames next door may very well cause a fire that will spread to your business. There are various types of buildings and policies with property coverage are rated based on these.

Loss History

A claim may or may not increase your premium.

This really depends on the type of claim and possibility of it happening again. Several claims will increase your premium as well as possibly decreasing your coverage. Insurance companies also look at the history of claims in your class of business and this helps them determine your base premiums.


Your policy comes with several types of deductibles.

They are your portion of a loss that you are required to pay. Lower deductibles mean higher premiums. The higher you increase your deductible the more you should save. Be careful though, sometimes the savings are not worth the risk of having to pay a large deductible out of your pocket.