Your business insurance renewal went up. What now?

Put last year’s declarations pageDeclarations pageThe declarations page is the summary at the front of an insurance policy listing who’s insured, what’s covered, the limits, deductibles, premium and policy dates.Read the definition next to the renewal offer and compare them line by line before you do anything else. A higher renewal almost always traces back to one of four things: the business got bigger on paper, you had claims, the insurer changed how it classifies or rates your kind of business, or rates went up for everyone like you. Each has a different fix, and you can’t pick the fix until you know which one you’re looking at.

Once you know, ask the insurer to explain the change in writing, then get a quote for the same coverage somewhere else to see whether the new price is the market or just your insurer. Start that 60 to 90 days before the renewal date, because a quote you get the week before is a quote you’ll be pressured to accept.

Find out which number moved

Here’s how a renewal price comes together, so you know where to look: most business policies are priced as a rate multiplied by an exposure base. The exposure is the measure of how much business you do, usually payroll for workers’ comp and often sales or payroll for general liability, while property is priced on the values you insure. The rate is the insurer’s price per unit of that exposure for your class of business in your location, and your own claims history then moves the result up or down from there.

So there are four places a renewal can change.

Your exposure grew. If your payroll estimate went from one part-time employee to three full-time staff, the premium follows, even if the rate didn’t change at all. The National Association of Insurance Commissioners (NAIC) notes that general liability premiums are typically linked to a business’s sales and payroll estimates, and that the addition or reduction of employees, or changes to your building, can change what you pay. That’s fair when you’ve grown, but check whether the renewal’s figures match your real numbers. Sometimes an insurer carries forward a payroll or revenue figure from your last premium auditPremium auditA premium audit is the insurer’s review of your actual payroll, sales or other figures after a policy ends, used to replace estimates and set your final premium.Read the definition, which can be higher than what you expect this year, and sometimes the number is simply out of date.

You had claims. A claim in the past year or two can raise the renewal, but repeated claims of the same kind usually do more harm than one, because they suggest a pattern, and your loss runs show exactly what the insurer sees.

Your classification changed. A new class codeClass codeA class code is a number insurers use to classify what your business does, so your rates reflect the typical risks of businesses doing similar work.Read the definition, a new service line (a café that started catering, a handyman who started doing roof work) or a reclassification after an audit can move you into a group with a higher rate.

The rates changed. Sometimes nothing about your business changed. Insurers adjust their rates for a whole class of business or a whole region when their own costs move, and the NAIC notes that areas prone to hail, wind storms and hurricanes, and high-traffic, high-theft locations, typically carry higher rates. This is the one cause you can’t argue with, though you can shop it. For what drives each policy’s price, see how much business insurance costs, what decides the cost of general liability insurance and what decides the cost of professional liability insurance.

Why workers’ comp looks backward

A workers’ comp renewal can rise because of an injury from years ago, and owners rarely see it coming.

If you’ve been in business long enough and your premium is large enough to qualify, your workers’ comp premium is adjusted by an experience modification rateExperience modification rateAn experience modification rate (EMR) is a workers’ comp factor that raises or lowers your premium by comparing your past claims with those of similar businesses.Read the definition, a multiplier that compares your own payroll and loss history with the average for businesses in your class. A mod above 1.00 is a debit that raises the premium. Below 1.00 is a credit that lowers it.

Watch the dates. The National Council on Compensation Insurance (NCCI), which calculates mods in the states that use its experience rating plan, gives an example in its guide: an employer whose policy renews on January 1, 2026, will generally have a mod built from the losses during the policies that ran from January 1, 2022 through January 1, 2025.

Read that range again. The current policy year isn’t in it at all, because NCCI says the mod is calculated during the current term, generally 60 to 90 days before the renewal date, and a policy’s first data report to NCCI generally isn’t due until 18 months after the policy starts. That means an injury from early 2022 can still be raising your premium in 2026, and the safety improvements you made last year won’t show up in the mod until a later renewal.

Two things follow from that. First, a renewal increase on workers’ comp may say nothing about how this year went, so ask your insurer whether the mod changed and, if it did, to see the worksheet behind it. Second, a bad claim keeps working against you for roughly three renewals, which is the strongest argument there is for getting injured employees good care and back to work quickly, since NCCI’s plan gives employers an incentive to do exactly that.

The plan also weighs frequency more heavily than size: NCCI says it gives greater weight to how often accidents happen than to how much each one costs, so several small claims can move a mod more than one large one. If your mod went up after a year of small injuries, that’s the formula doing what it was designed to do, and how workers’ comp premiums are calculated walks through the rest of it.

What should you ask your insurer?

You’re entitled to understand what you’re being asked to pay, so put these questions to your insurer, or to the agent who placed the policy, in writing:

• Which parts of the premium went up, and by how much on each policy?
• What payroll, revenue or property values is the renewal based on, and where did those figures come from?
• Did my class code, territory or any rating factor change?
• Did any credit or discount I had last year come off, and why?
• Did my experience mod change, and can I see the worksheet?
• Did any coverage, limit, deductible or endorsement change from last year?
• Is there anything I could do before renewal, like updating my payroll estimate or adding a safety program, that would change the price?

The answers often point to a fix that has nothing to do with switching. A stale payroll figure can be corrected, a claim that closed for less than its reserve can be updated on the loss run, and coverage you no longer need, like insurance on equipment you’ve sold, can come off the policy.

Compare the same coverage, line by line

Say a café gets two general liability quotes and one comes in well under the other. Side by side, the cheaper one has a lower aggregate limit, a higher deductible and no additional insured endorsement, which the café’s lease requires. That’s a smaller policy at a smaller price. The NAIC’s advice to small businesses is to compare the costs of equivalent coverage from several insurers, and “equivalent” is the word doing the work.

1. Match the limits. Same per-occurrence and aggregate limits on each policy, which how to choose liability limits explains.
2. Match the deductibles. A higher deductibleDeductibleA deductible is the amount you pay toward a covered loss before your insurance pays, usually subtracted from the claim payment.Read the definition lowers the premium and raises what you pay on every claim.
3. Match the endorsements. If your lease or client contracts require additional insuredAdditional insuredAn additional insured is a person or company, such as a landlord or client, added to your liability policy so it can protect them from claims tied to your work.Read the definition status, a waiver of subrogationWaiver of subrogationA waiver of subrogation is an agreement, usually added to your policy by endorsement, that stops your insurer from recovering claim payments from a specific client, landlord or contractor.Read the definition or primary and noncontributory wording, the new quote has to include them, or you’re out of compliance on day one.
4. Match the exposure figures. Give every insurer the same payroll and revenue estimates, so the price is the only thing that differs.
5. Check the policy form. Look for exclusions or sublimitsSublimitA sublimit is a smaller cap within a policy’s overall limit that applies to one specific type of loss or coverage, and it doesn’t add to the overall limit.Read the definition the other quote doesn’t have, since two policies with the same name can cover different things.
6. Keep your retroactive date. If your professional liability is a claims-made policyClaims-made policyA claims-made policy covers claims first made against you during the policy period, for work or incidents that happened on or after the policy’s retroactive date.Read the definition, the new quote should keep your current retroactive dateRetroactive dateA retroactive date is the earliest date of work or events a claims-made policy covers, so anything that happened before it isn’t covered, even if the claim is new.Read the definition, or work you’ve already done may lose coverage.

With Corgi, you can get a quote for the same coverage to compare.

Start 60 to 90 days out

Timing is where most owners lose their options. If the renewal offer lands two weeks before the policy ends, you have just enough time to renew but almost none to compare, and an insurer quoting you for the first time will usually want loss runsLoss runA loss run is a report from your insurer listing the claims filed under your policies over a set period, with dates, amounts paid and whether each is still open.Read the definition that can take weeks to arrive.

So work backward from the renewal date. About 90 days out, request your loss runs and update your payroll and revenue figures, and around 60 days out, ask your current insurer what the renewal will look like and start getting comparison quotes. And in the last few weeks, make the decision with time to spare, because the one outcome to avoid is a gap between the old policy ending and the new one starting. If you do switch, how to switch business insurance without a gap covers the timing, cancellation and the certificates you’ll need to send out.

How much notice an insurer has to give before raising a premium or declining to renew is set by state law, and the rules vary, so if a renewal or a nonrenewal arrives with very little warning, check with your state’s insurance department through the NAIC’s directory of state insurance departments.

When the higher renewal is the better deal

Sometimes the right answer is to pay it. If the increase traces back to your own growth, more payroll, more revenue, a second location, then every insurer will price that growth, and switching only buys you a new learning curve. If your current insurer has handled a claim well, that counts for something. A cheaper insurer can still be a bad trade if it has a coverage gap you don’t notice until a claim.

What you shouldn’t do is renew without looking. Check the exposure figures, ask about the mod, compare at least one quote for the same coverage and decide with the facts in front of you. An owner who does that and renews anyway has made a choice. An owner who signs the renewal because the deadline arrived has made the insurer’s choice instead.