Understanding how pricing and costs of insurance is determined will help you choose the best policies for your business. Businesses can purchase insurance to cover nearly any risk. With so many options available, it’s often difficult for businesses to fully understand the true cost and value of business insurance.

While the pricing and costs of insurance varies by policy type, small businesses have seen an increase in insurance premiums across the board. For example, the costs of employer-sponsored health insurance plans for a family average more than $12,000 annually. Obtaining business insurance quotes is the most effective way to determine the cost of each type of business insurance. It’s unrealistic to find an average cost estimate for business insurance, because insurance costs are customized and quoted based on various risk factors. Consider the following tips to help you learn more about the pricing and costs of insurance:

1. Explore business insurance coverage options.

2. Compare business insurance quotes from various providers to get an idea of the average costs.

3. Research how providers price business insurance plans.

Action Steps
The best contacts and resources to help you get it done

Read advice from providers of business insurance

Talking to insurance providers will help you determine which types of insurance you need for your company. Plans are customized to meet the specific needs of companies and provide coverage for a range of risks including property damage, professional liability, commercial auto accidents and many other occurrences that could affect the longevity and success of your company. Among other variables, the level of coverage required affects business insurance costs.

I recommend: Allstate Insurance Company is one the nation’s largest insurance providers and can provide you with an idea of how insurance is priced. You can also explore options and pricing for business insurance online offered by Travelers, a well-known U.S. insurance provider.

Compare the pricing and costs of insurance to learn how to get an affordable policy

Once you have determined which insurance policies are best for your business, it's important that you take some time to shop around for business insurance quotes. It's never a good idea to use affordability as an excuse to go uninsured or underinsured in any area of insurable risk. By obtaining a small business insurance quote, you can better plan for the cost of business insurance.

I recommend: Check out Insurance Cost Reduction Services to learn more about how you can reduce your business insurance costs. You may also obtain a small business insurance quote from AARP, a division of Hartford Financial Services Group.

Learn more about business insurance cost factors

Business insurance quotes are based on a variety of factors. For health insurance, providers will inquire about the age and number of individuals you plan to insure. To obtain a small business liability insurance quote, you may be asked to provide information about the types of products/services provided by your business. There is also a range of other factors considered by business insurance providers, such as business location.

I recommend: You may obtain free business insurance quotes from Resource Nation. You may also obtain free quotes for business insurance online by visiting Business Insurance Services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Business insurance can be expensive, but there are ways to save on your policies. For example, you can lower your premium by increasing your deductible. It's also good to note that business insurance premiums are tax deductible as business expenses, which makes the expense more worthwhile.

Insurance policies come in different varieties with a tangle of wording, definitions and exclusions. You need to understand what you want to protect and be certain that you get the right amount of security from your insurer. Obtaining insurance for your business can be summarized in three basic steps:

1. Understand the different kinds of coverage and determine what kind of protection you want and what is required by law.
2. Review the coverage terms and make sure the policy gives you the level of security your business requires.
3. Put the policy to work. Familiarize yourself with claims filing, deadlines and ways to update the policy as your company grows.

Action Steps
The best contacts and resources to help you get it done

Understand the terminology

You need to know how risks are defined, what coverage you are getting - property/casualty, liability, workers compensation - and the policy terms.

I recommend: The U.S. Small Business Administration (SBA) provides a guide with an insurance-needs checklist and glossary. Q&A's are available from the Insurance Information Institute (III) and the Independent Insurance Agents and Brokers Association (IIABA). The Nonprofit Risk Management Center provides annual webinars on the fundamentals.

Determine what you need

Examine your company's risks before shopping for a policy so you are ready to answer the insurer's questions.

I recommend: Insure.com offers a Small Business Liability Tool as well as a Workers Compensation Insurance Law Tool that to help determine the insurance considerations for your particular business. The American Express offers a tool to help evaluate your insurance needs and determine what polices to consider. Entrepreneur.com has a detailed insurance encyclopedia.

Get quotes

Agents and brokers sell the policy and provide support services after the purchase. Online quote requests enable you to compare multiple instant options to get the best price for the best coverage.

I recommend: The Insurance Information Institute (III) has a simple Insurer Finder tool, searchable by state. Before you buy, check the insurer’s rating with A.M. Best.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  A multi-coverage business owners policy (BOP) may be all you need, but ask about additional specialty policies, like e-commerce insurance, for your particular niche.
• •  Price is not everything. The lowest cost may not provide enough protection, but don't waste money on risks that your company can afford.
• •  The differences are fading between agents (who work for the insurer) and brokers (who work for you). But be aware if the agent is affiliated with multiple organizations or just one.
• •  In certain industries, reasonably priced insurance coverage is difficult to find, so organizations band together to form a pool, or a self-financed and administered group insurance program.

Knowing the insurance basics will help you choose the best policies for your business. Businesses can purchase insurance to cover nearly any risk. With so many options available, it’s often difficult for businesses to fully understand how and why they should obtain business insurance.

There is a range of business insurance policies available to insure company operations, products and services. These include life insurance for business employers and employees, health insurance, commercial auto insurance, liability insurance and property/casualty insurance. Consider the following tips to learn more about the commercial insurance basics:

1. Determine the benefits of obtaining business insurance.

2. Explore your business insurance coverage options.

3. Obtain a small business insurance quote to weigh the cost of business insurance.

Action Steps
The best contacts and resources to help you get it done

Protect your assets with business insurance

Business insurance is designed to protect your company's assets. In this sense, it's viewed more so as a necessity rather than a luxury. Business insurance is a wise investment to limit your liability and to help your company survive financially.

I recommend: Check out the Insurance Information Institute to obtain a wealth of information on insuring your business, including the basics of business insurance, how buy a policy and save money during the purchase and what kind of additional coverage is available. You can also check out My Own Business for valuable information on how to best insure your business assets.

Consult with providers of business insurance

Business insurance isn't one size fits all. Talking to insurance providers will help you determine which types of insurance you need for your company. Plans are customized to meet the specific needs of companies and provide coverage for a range of risks including property damage, professional liability, commercial auto accidents and many other occurrences that could affect the longevity and success of your company.

I recommend: State Farm Insurance is a national provider of a variety of business insurance plans. Ask them to explain business insurance basics and the various types of insurance available. Consider trying the business insurance analysis tool provided by The Hartford Financial Services Group to better understand what basic coverage you need.

Learn more about how business insurance is priced

Business insurance quotes are based on a variety of factors. For health insurance, providers will inquire about the age and number of individuals you plan to insure. To obtain a small business liability insurance quote, you may be asked to provide information about the types of products/services provided by your business. There is a range of other factors considered by business insurance providers, such as business location.

I recommend: Check out BuyerZone to obtain free quotes for business insurance online from various top insurance providers. You can also obtain a variety of small business insurance quotes from Gaebler Ventures.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Because business insurance can be costly, it's wise to budget for insurance premium costs and expand your options by reviewing quotes from several insurance companies. As a general rule of thumb, price should never be your sole reason behind choosing one provider over the other. You should also strongly consider claims, reputation of the provider and whether or not the insurer can accommodate your business if it grows.