What Influences the Cost of Your Commercial Property Insurance Premium?

According to the Insurance Information Institute there are over seven million small businesses in the United States, ranging from construction firms to grocery stores and home-based businesses. Regardless of which type of business you own, commercial property insurance is a must-have to protect your property and your business. Without insurance, you can’t be protected from a disaster or a lawsuit.

Because every business has a different set of needs, it’s best to have personally-adjusted coverage by an insurance agent.  No two cases are the same, and a lot of things can influence the cost of your commercial property insurance premium. Take a look at a list of some of those things below.


Location matters. This key factor will easily help an insurance agent determine what kinds of environmental risks you may face, whether it’s tornadoes, floods or earthquakes. Another factor impacting insurance premiums that has to do with location is the overall land value and local laws.

Size of Business Premises

The bigger it is, the most it’s going to cost. A large office or warehouse is definitely going to cost a bit more than a small rented room.

Safety and Security

If your business is in a high-crime area, then it’s going to affect your insurance premium costs. Other things that will impact costs include possessing toxic materials or engaging in dangerous activities like mining. If your security measures are subpar, then it can impact your commercial property insurance rates.

Building Age

How old is the building? The older it is, the more susceptible is it to damage, therefore it costs more to insure. For example, a fire caused by old electrical wiring could end up as a costly rebuilding project, especially since it will have to be rebuilded to code.

Type of Equipment

What kind of equipment are you using? This will highly affect your policy. If your business is using heavy machinery, it’s going to cost more to insure compared to a small office doing all paperwork.

Age of Equipment

The more expensive the equipment is, the more troubles you’ll have in the long run. If you’re using certain machinery with scarce parts, it’s going to be much harder to find parts when you need them. You may also pay higher premiums if you machinery is more likely to break down from heavy use. If you use older machinery, it’ll be easier to repair long term.

Replacement Value vs. Actual Cash Value

Replacement-value coverage costs more than cash-value coverage. Replacement-value covers all costs when a rebuild is needed. It’s the way you’re going to get brand new gear. Cash-value coverage pays out what the depreciated property is worth. These policies cost less.

About Haughn & Associates

Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.