Here are a few of the major factors that determine business insurance costs: The type of company – A company in a high-loss industry will pay higher business insurance costs. For instance, construction businesses have above-average workers’ compensation and general liability losses, so they pay higher rates than a company whose employees are office-based. Coverage levels – Obviously, business insurance costs more when it covers more. To take one example, a five-employee business with $500,000 in liability coverage will pay substantially lower rates than a 50-employee business with $15 million in liability coverage. Location – If a business is located in a severe weather area, high-crime locality, etc., business insurance costs will be higher. Additionally, businesses at-risk for flood and earthquake damage will require separate business insurance policies to cover for these disasters. Optional coverages – Do employees travel for business purposes or drive company vehicles? Does the company purchase specialty policies such as business interruption insurance? If so, the company will require additional coverage, resulting in higher business insurance costs. Claims history – Similar to other forms of insurance, if a business has a history of filing claims, it may be viewed as high-risk and charged a higher premium.