8 factors that influence the premium

1. The type of business you run

A massage therapist does not have the same underlying risks as a manufacturer who sells heavy machinery. Nor are the risks incurred by a plumber the same as those incurred by a real estate agent.

It’s therefore important that you clearly describe the nature of your professional activities to your insurer.

2. The value of the items used for professional activities

What items do you use for your professional activities? Computer equipment, camera, furniture, books, tools, etc.

List the exact value of your property to help you choose the right coverage – not too high, not too low.

The higher the coverage, the higher the premium. On the flip side. If you opt for lower coverage, the compensation will be smaller in case of loss, but you’ll be paying a lower premium.

3. The building or your place of work

Your insurer evaluates certain building features, including its age, location and construction material to establish the coverage required.

If you own or co-own the building, your insurer will also evaluate the cost of rebuilding. Note that the coverage amount for the building does not correspond to your mortgage – which generally factors in the value of the land – but rather how much it would cost the rebuild.

The building’s features taken in account by your insurer:

• Construction material used: wood, brick, aluminium or concrete
• Building age and size
• Building location: city or country? Residential, commercial, new or historic neighbourhood?
• Heating system (electricity, gas, oil)
• Reconstruction costs, including leasehold improvements, in case of total loss. Note, this is not the same amount as the market value, municipal evaluation or amount of your mortgage.

4. Fire alarm system

Your insurer will also evaluate the fire alarm system in the building or in your workplace, using certain analysis criteria.

• In case of a fire, how far is the nearest fire hydrant?
• Proximity to the fire station?
• Is your building equipped with a sprinkler system?

5. Your claims history

Your insurer will take into account the number and type of claims you’ve already made. He’ll also factor in the crime rate (theft, vandalism) and fire stats in the sector where your building or place of work is located.

6. Your policy and coverage

Your premium reflects your choice of coverage:

• Type of policy (Named Perils or All Perils)
• Endorsements (additional coverage) added to your policy

7. Deductible

The deductible is the amount you accept to pay in case of loss. The higher the deductible, the lower the premium.

The deductible can vary significantly, depending on the value of the items covered or the additional protections chosen. Choose the amount of the deducible based on what you would be able to pay in case of loss.

8. Credit record

Your credit record may be part of the factors used by your insurer to establish your insurance premium.

For more information on the business insurance market, consult our blog on the subject.