Business & Finance Business Insurance

Insurance Risk Factors

    Location of the Business

    • You business address may have some associated risk attached to it. For example, a business in a large metropolitan city that has a high crime rate may be more vulnerable to break-ins than one located in the downtown area of a rural community. Additionally, the state and area your business is located in may have a perceived risk of being more vulnerable to natural disasters like floods.

    Type of Business

    • Some business operations are riskier than others. If you are an accountant who runs a business out of a small office, risk factors will be substantially lower than if you had a business that employs hundreds of workers to take care of wild animals in captivity.

    Special Structures

    • Structures on your property may pose a high risk of injury. For example, a playground at a fast food restaurant can make a business uninsurable by some insurance companies because of the higher risk of injury. Pools, fountains and stairs are also items taken into consideration when determining insurance risks.

    Number of Employees

    • The more employees you have, the greater the chances are that you will have a workers' compensation claim. Moreover, the more employees present, the greater the chance that you will have a claim against your employment practices or discover that you have a dishonest employee.

    Credit Rating

    • Your ability to make bill payments on time, pay back a major loan and be in good standing with credit card companies can make a difference in whether you are personally considered a risk or not. The Federal Trade Commission states that your credit score is taken into account when calculating risk and insurability.

    Property Damage Risk

    • The types of heavy machinery used around a building, combustible chemicals used inside and the safety procedures implemented are all considered insurance risk factors. Any part of your business operations that can damage your property is a risk.

    Past Losses

    • Insurance companies may consider the number of claims you have filed in the past and their frequency to be a risk. While some operations have expected risks, such as rescue diving operations, a high frequency of claims may indicate that proper safety protocols are not in place.

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