Calculating premiums for a CGL policy is a complex process. The big questions that your insurance representative will want to be answered are:
– What kind of business is it? Different businesses have different levels of risk for lawsuits. For example, most contracting businesses pay higher CGL premiums because they are working in people’s homes and at their places of business. On the other hand, a consultant who never sets foot on the client’s premises could pay less for CGL coverage. (Note: Consultants are more likely to get sued for professional liability, which is a different type of insurance related to giving bad advice.)
– How much revenue does your business bring in? Larger revenues are an indication of a business with more clients, more work, larger value relationships with clients, etc. In these cases, you are more likely to be sued, and for larger amounts, than a business with fewer or smaller interactions with its customers.
– How old is your office? For businesses with an office or shop where you meet with clients, an older building, or one that’s not well maintained, has a higher risk of someone getting hurt or other property damage happening.
– Where is your business located? Factors like crime rates and traffic volume can affect the risk of someone getting hurt at your place of business.
– How long have you been in business? A business that’s been around for 40 years is more likely to have safety measures in place that will reduce the risk of a lawsuit.
Have you made claims? For how much? How long ago? This one’s obvious, no?