Risk Factors/Exposure

In insurance, risk means the likelihood of loss. The biggest factor in determining the cost of business insurance quotes is the risk that business insurance company takes when they insure you. The more exposure to risk that a business has, the higher its insurance costs will be. A roofing company or a demolitions firm will pay more for insurance than a realtor because they take greater risks.

Business insurance companies generally determine the risk level and premium using the calculations of mathematicians called actuaries, or risk analysts.

Exposure to Liability Risks
One of the biggest factors in determining the business insurance quote you receive is the exposure to liability risks  the likelihood of getting sued. Businesses that are more likely to get sued pay more for liability insurance.

Shops that are open to the public pay more in liability because the risk that a customer will get hurt on the premises and sue the store is higher. Large chain stores may pay more in liability insurance than mom-and-pop shops because the former are more likely to be sued. Similarly, doctors may pay higher liability insurance than accountants because they are more likely to be sued by their patients.

Every business owner should determine his or her exposure to liability, which can determine the cost of insurance and the profit a business makes.

Risk Mitigation
Risk Factors/Exposure There are actions that business owners can take to mitigate risks and reduce their business insurance costs.

One example of risk mitigation is installing a fire alarm and fire sprinklers, which reduces the risk of fire damage and so can reduce the fire insurance premium. Another example of mitigation is having workers wear hard hats at a construction site, which mitigates a risk by reducing the chance of injury.

It is always a good idea to ask insurance agents and others what steps a business can take to mitigate risks. Even simple steps such as safety training for workers can reduce business insurance premiums and save businesses money.

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