When deciding to buy insurance, one may question, “What does insurance cost?” The answer is not so simple. Instead, it is better to explain the factors, extras and overall base costs of personal and commercial insurance.

Many individuals interested in personal insurance are given the option of choosing from auto or homeowners insurance, but are also able to combine the two. Let’s look at some of the factors that decide the base cost of insurance without extras:



· Age of Driver(s)

· Credit History and Rating

· Driver Profile Discount

· Driving Record/Claims History

· Good Student

· Limits of Liability

· Multi-Car

· Package Credits (multiple policies)

· Payment Option (paid-in-full discount)

· Previous Cancellation

· Previous Coverage Limits & Deductibles

· Type of Vehicle

· Usage of Vehicle – Business, Pleasure & Number of Miles

· Acreage

· Age of Roof

· Amount of Coverage on Home

· Business Activity

· Claims History

· Construction Type

· Credit History

· Distance from Fire Dept. and Hydrant

· Farming

· Limit of Liability

· Location

· Unique Items (jewelry, artwork, furs, etc.)

· Woodstove/Fireplace

· Year Built

With all factors of the cost of insurance considered, there are extra coverages that can be included or endorsed to a policy.

Some extra coverages that can be included with auto insurance: Accidental Death, Accident Forgiveness, Extended Non-Owned, Full Glass, Guaranteed Renewal, Loan Lease, Mechanical Parts Replacement and New Car Replacement.

Some extra coverages that can be included with homeowner’s insurance: Increased or Guaranteed Replacement Cost, Ordinance or Law, Personal Property Replacement Costs, Water Back-up of Sewers and Drains, Earthquake, Equipment Breakdown, Identity Theft Expense, Incidental Farming, Matching of Undamaged Siding or Roofing, Sewer Line, Sinkhole and Personal Injury Liability

Those seeking commercial insurance will have to consider slightly different factors.

These can include:

· Claims History

· Deductibles

· Distance to Fire Station or Hydrant

· Inventory

· Liability Limits

· Loss Control – Alarms, Sprinkler System

· Number of Employees

· Number and Type of Vehicles

· Payroll

· Prior Insurance History

· Property Insurance Limits

· Safety Measures

· Sales Receipts

· Type of Business

· Type of Industry

· Years of Experience

· Prior Insurance History

While the factors of commercial insurance are definitely an aspect one should consider when buying insurance, the extra coverages should also be noted that a business may need.

Optional coverages that should be considered in commercial insurances are: Business Income, Commercial Auto, Privacy or Data Breach/Cyber Liability, Directors and Officers Liability, Employment Practice Liability, Equipment Breakdown, Hired/Non-Owned Auto Liability, Professional Liability, Umbrella and Workers Compensation.

It is important to note that these are additional coverages that may not be included in your commercial insurance programs, so it is always a good idea to review your coverages and ask questions.

There is no universal answer to “What is the cost of insurance?” The rating factors and optional coverages can help one determine what affects the cost and remove the mystery behind insurance pricing. The next step will be contacting an insurance agency and speaking with an agent. This will allow the customer to express their insurance needs with someone who will work to calculate the best value of coverage and cost.

Posted 9:37 PM

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