How The Location of Your Business Impacts Your Insurance

When looking for the best business insurance, there are going to be a number of things that impact your policies. Whether it’s the type of work you do, the industry you work in, or the tools and equipment you rely on, every part of your business venture will be taken on board and acknowledged to calculate the right level of coverage for you. 

One of the most significant parts, for instance, is the location your business operates in. You may have noticed, for instance, that US professionals living in cities like Los Angeles are paying higher general liability premiums than those living in more rural areas like Wexford County, and there’s a very good reason for this. We’re going to take a look at it in more detail below, explaining not only how, but why the location of your business impacts your insurance so heavily.

Crime Rates

The first thing to note is the crime rate. When using a general liability insurance calculator, one of the key data points it might factor in is the level of criminal activity in your business’s area, which could lead to increased premiums, especially if you store expensive tools, tech, or inventory on-site. 

Going back to our urban and rural comparison, the reason Los Angeles businesses pay higher premiums than businesses in Wexford County is, at least in part, due to the higher crime rates, with LA experiencing a crime rate of about 3,115 per 100,000 people, while Wexford County’s is 1,793. Because of this, there is more risk of a Los Angeles-based business suffering theft, vandalism, or property damage, which insurance companies factor in when doing their risk assessments.

Risk of Natural Disasters

There might also be a higher risk of natural disasters which could severely disrupt your business operations. If you’re operating a business in California, for instance, you’re operating in a state that has a long history of wildfires and earthquakes, both of which can cause significant damage to property. This will be taken into account when calculating anything from general liability coverage to property insurance and business interruption insurance.

Type of Building

It should also be noted that the location doesn’t just refer to the state or area you’re operating in. On the contrary, one of the most important things an insurance company will consider is the building itself, with changing premiums depending on whether you’re in a commercial office, a retail store, a warehouse, or even working from home. 

To give an example, if you’re running a business from a leased commercial space, there’s a good chance you’ll need additional liability coverage and property insurance to suit that environment. In contrast, one of the benefits of a home-based business is that it might only require a tailored home business policy, covering business-related equipment and liability. 

Local Laws and Regulations

Local laws and regulations will also play their part. Across the US, different states and municipalities have varying requirements for business insurance coverage, including minimum liability limits, workers’ compensation mandates, and licensing regulations. As well as this, certain industries may be more heavily regulated in some locations, which will influence the kind of coverage needed to remain compliant. Insurance companies will factor this in when determining your policy options and premiums, ensuring that your coverage meets the legal standards of your specific area. 

Population Density

Lastly, although it might not be as influential as crime rates or local regulations, population density plays its own part in what kind of premiums you’re going to be offered. The reason for this is that businesses located in densely populated areas are going to face higher risks of accidents, damage, and liability claims, simply because there are more people who might cause an incident to happen. 

For example, a business in a busy city centre is more likely to experience slip-and-fall accidents or vandalism compared to a business in a remote, rural area. As a result of this, insurance companies recognise that there might be more potential for frequent or costly claims, and will charge higher premiums to reflect that.