Does the Location of my Business Affect Coverage Needs?

The location of your business will affect your coverage needs. As is true in any insurance scenario, the more risk involved the more you will pay for the coverage. There are several things about your location that you will need to think about before settling there if you want to control your insurance costs. There are also steps you can take to reduce the risks associated with your location if you are already settled there.

Insurance companies want to provide you with insurance at a rate that protects them. They want to figure out how risky your location is and what that means for their costs and your costs. We will look at examples to better understand the way insurance companies determine risk according to your location. We will also look at ways you can control your insurance costs regardless of your location.

Location, Location, Location

So you have probably heard how important location is to the success of your business. I mean if you want a successful pawn shop you don't put it in the richest neighborhood. You don't put a restaurant out of the view of traffic. On the other hand, did you ever consider the costs of operating your business in a risky area? For example, if you want to have a restaurant on the beachfront you have to be prepared to purchase hurricane insurance with additional flood coverage. If you are near a wooded area, you have to consider the additional risks of fire.

Also, if you want to operate a business in an area with high crime rates, you will pay more to protect your business and your property against theft and vandalism. Although these are not as important as determining things like employee paid leave time, these are normal, everyday costs of doing business. Ideally everyone would be able to operate their business without all the risk but it is part of the business experience. You can do some things to try to reduce your risk factors and insurance companies are very impressed by proactive measures that have been shown to work.

If you are living near a known earthquake zone but you rent space in a newer building with proven design additions that protect people and property during earthquakes you will see a discount. If you run a business on the beach but you have added protection to keep out water during storms, you will save some money on your flood insurance.

Insurance Companies

Insurance companies are in the business of weighing risk versus reward. They want to take you on as a client and you pay them premiums. Their hope is that you will never make a claim, or make a minor claim, and they get to keep all that money as a reward for taking on your risk. It is not a bad deal for either them or us. When you can do small things to reduce your risk, it appears to them that they will have increased reward which lowers your costs.

The location of your business will affect coverage needs in some ways. Ask your current or prospective insurance company what you can do to improve the conditions at your present location. They will probably have some good, inexpensive measures to recommend. Not every business can operate in the ideal spot. If they tried there would be a whole lot of places with no services offered or products sold. The great thing about insurance is you can balance your risk and keep your business safe and sound when you have the right insurance portfolio protecting you.

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