Insurers, MGAs and Program Administrators use ISO General Liability Rating, or a custom carrier rating system to help them in determining just what rates to charge. All companies, whether they are a large corporation or a small business, realize that it is essential that they carry some form of general liability (GL) insurance because this is something that no one in business can afford to go without.
Everyone in business faces some sort of risks, either related to their profession or line of work, or inherent in operating a company, regardless of what type. Accidents happen, exposures exists, and with a concern for employees, vendors and customers alike, no matter how much planning is done, or safety measures are implemented, there is always a chance that something can go wrong. And depending on the industry, the rates will vary due to a number of factors that help to determine those rates.
Revenues are just one way to determine rates
For example, in the hotel industry, some carriers determine the GL rates based on the revenues (room rates) that are charged. Other carriers may base it on the number of rooms at the facility. Either way, insurance helps to cover medical expenses, attorney fees and damages that a company may be found legally responsible for. It also offers protection against a number of situations that may arise, and without coverage, their business could end up financially ruined.
Qualified agents can help find the best rates available
Each company has its own unique set of circumstances, but depending on the type of business being operated, or products that are manufactured by a company there are factors that can help determine how much commercial general liability insurance is actually needed. An agent who specializes in, and is experienced with GL and Professional liability coverage can help an individual or organization determine these factors.
However, any company that is a high-risk business venture, or has a high volume of interaction with the public, such as retail businesses, should consider an increase in coverage to help facilitate any legal settlement against their company that could have a potentially devastating effect.
The value of a good GL policy outweighs any savings that a company might experience by not being properly insured. The use of an ISO General Liability Rating system will allow most carriers to determine what the best rates are for each company they are in the business of providing premiums for.