Anticipating the Cost of Business Insurance

Business Growth and Insurance

Planning on growing your business in 2025? See how insurance factors into this growth

New Year! New Potential! New Growth!

Like many business owners right now, I’m sure your sights are high anticipating the potential growth your business could have this year.  You’re exploring different revenue streams and avenues to acquire more customers while expanding your operations to new areas or sectors. We love to watch our small business owners reach new levels of growth and prosperity, and see their potential fulfilled. That luster in their eyes quickly disappears when we tell them their insurance premium has gone up because of their successful year. It rarely crosses our customers’ minds that insurance rates correlate with business growth and scope.

Calculating premium for business insurance is from two main sources: payroll/revenue and scope of work.

Having either of these two things inaccurate can make your insurance premium swing wildly.

There is always some numerical factor (sometimes called the “basis”) that the insurance premium is based on which will allow you to anticipate the premium during the policy term. That rate (a multiple or % of the basis which results in the premium) won’t change during the period but the basis can. The basis can be the number of units (like apartments), revenue (gross revenue usually), costs (like subcontractor cost), payroll (1099 & W2), or area (square footage). If you know your basis and the current term’s rate, you can usually anticipate the premium. The rate is usually correlated with your line of work and the risk levels associated with your work.

Insurance for New Business Owners

When we talk to someone who is starting a new business, one of the challenges is projecting future revenue and expenses such as payroll and subcontractor costs for the coming year. It can also be challenging for new businesses to anticipate all the services they may offer. Many have a good grasp of this, but some have the good misfortune of wildly underestimating these figures. Please know that if you have more success than you anticipated, your insurance premium will need to account for this.

Insurance for Established Business Owners

Once a business has had a year under its belt, they can better anticipate how much payroll they’ll have along with what type of work they’ll be doing. If you add people to your crew or add different services than what you previously told the insurance company, they will most likely hit you with an audit bill. Some business owners pivot to different products or services when they find these have a better margin or there’s more demand. If you stay in your industry, this usually won’t be a big deal but be sure to ask your insurance agent if you’re making big changes. A landscaping company that is now venturing into tree trimming and hardscaping will be classified differently with an insurance company and so the price will be different. If you don’t update your policy with these new services, you’ll either be hit with an audit bill, your policy will need to be rewritten or cancelled, or in a worst-case potential, claims will be denied.

When a Business Need Additional Types of Coverage

Most companies start off with basic insurance coverage like Liability and Workers’ Comp. These policies cover your customers, products/services, and your employees. Once your business expands, so should your coverages. If we took a furniture store as an example, they would most likely start with general liability and workers’ comp; but

If you start delivering that furniture, you will need new coverages not covered by your GL or Property, such as:

Commercial Auto – damage to your vehicles, employees’ vehicles, liability for car accidents, etc Cargo – damage during transport to inventory you don’t own, such as on consignment Inland Marine – damage to your inventory during transport or away from the business location

If you start manufacturing furniture as well:

Professional Liability – for design flaws Workers Comp – likely must be rewritten or change to basis

If you start supplying hotel chains

Umbrella – damage allegedly caused by you, your staff, or your furniture to higher-value or higher-frequency locations

if you add interior decorating services

Professional Liability – for financial harm because of your advice general liability – likely must be completely rewritten to allow for subcontractors and basis change

If contemplating ownership changes or

Life Insurance – to buy out your ownership stake in the business and ensure operations continue

If you want to construct a new warehouse or add onto or update an existing building

Builders Risk – physical damage to the new structure while under construction or remodel

Some policies can breathe and flex to accommodate changes, others can’t, and a new insurance company found. It’s important to work with your insurance agent to know how to manage each policy and the overall risk of your small business. Luckily, we have some of the most experienced commercial insurance agents in the Destin and Fort Walton Area. They can let you know what coverage you need now and ten years down the road. Give us a call at 850-244-1574 or visit our website to find out more www.norton-insurance.com.

Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording. Blog Archive - Search Blog

Recent Articles Jan 22, 2026 Florida Homeowners Insurance: Smart Ways to Lower Your Premium Without Sacrificing Protection Sep 8, 2025 Has the 2022 Legislation on Insurance Reform Helped Florida Residents? Aug 4, 2025 Contractor Bonds Explained: How to Get Bonded and Land Lucrative Projects Jul 28, 2025 The Golf Cart Insurance Gap: What Rental Property Owners & Managers Need to Know Jul 11, 2025 Neighborhood engineering fighting against the devastating affects of flooding

<!--

//Specify the slider's width (in pixels)

////NO NEED TO EDIT BELOW THIS LINE////////////