How are Business Liability Insurance Rates Affected by Business Credit?

According to the website, III.com, insurance companies rank people based on "insurance scores." III.com states that, "Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims." These scores are used to allow insurance companies to differentiate between lower and higher insurance risks and charge a premium that is appropriate for the amount of risk taken. The article goes on to say that, "Statistically, people who have a poor insurance score are more likely to file a claim."

The same holds true for business credit and business insurance. A business credit rating is a good indication of how a business handles its financial affairs, and thus, how likely the business is to file an insurance claim. A business with a lower credit score will receive higher business liability insurance rates, having managed its financial affairs poorly in the past. A business with a higher credit score will receive lower business liability insurance rates, having managed its financial affairs well in the past, and therefore, is a lower risk of filing a claim.