Shield Insurance Agency Blog | Loss Ratio | Start A Quote Today!
When it comes to business insurance, one of the key factors that affect your premiums is your loss ratio. But what exactly is a loss ratio? In simple terms, it is the ratio of the losses you have experienced to the premiums you have paid. It is a measure of how much you have claimed from your insurance company compared to how much you have paid in premiums.
Commercial Insurance
For businesses, the loss ratio is an important metric that insurance companies use to determine the risk associated with insuring your business. A high loss ratio indicates that your business is more likely to make claims, which means that the insurance company will have to pay out more in claims. As a result, they will charge you higher premiums to compensate for the increased risk.
How a Loss Ratio Works
To understand how a loss ratio works, let’s consider an example. Let’s say your business paid $10,000 in premiums over the course of a year, and during that same year, you made claims totaling $5,000. In this case, your loss ratio would be 0.5, or 50%. This means that for every dollar you paid in premiums, you claimed 50 cents.
Loss Ratio vs. Benefits-Expense Ratio
It’s important to note that the loss ratio is different from the benefits-expense ratio. While the loss ratio measures the claims you have made compared to the premiums you have paid, the benefits-expense ratio measures the benefits paid out by the insurance company compared to the expenses incurred by the insurance company.
Deductible
Another factor that affects your loss ratio is the deductible. The deductible is the amount you have to pay out of pocket before your insurance coverage kicks in. A higher deductible means that you will have to pay more out of pocket for each claim, which can lower your loss ratio. On the other hand, a lower deductible means that you will have to pay less out of pocket for each claim, which can increase your loss ratio.
Affordable Protection for Your Business and Family
Understanding how your loss ratio affects your business insurance premiums is crucial for ensuring that you have affordable protection for your business and family. By maintaining a low loss ratio, you can demonstrate to insurance companies that your business is a low-risk investment, which can result in lower premiums.
Shield Insurance Agency represents over 40 insurance companies, which means that we can help you find the best coverage at the most affordable price. Our experienced agents will work with you to assess your needs and find the right insurance policy for your business. Whether you need general liability insurance, property insurance, or workers’ compensation insurance, we have you covered.
Contact Shield Insurance Agency at (616) 896-4600 for a free quote today or start the quoting process by visiting this LINK and an agent will be in touch soon. We understand that every business is unique, and we will tailor our services to meet your specific needs. Don’t let high insurance premiums eat into your profits. Let Shield Insurance Agency help you find affordable protection for your business and family.
