Why Your General Liability Premium Went Up — Even Without a Single Claim

Gerald Burns
2 days ago
4 min read

Small business owner reviewing a general liability insurance renewal document at a desk with coffee and laptop.

Running a clean business feels good. You operate safely, follow the rules, and never file a claim. Then renewal time comes, and your invoice still goes up. What gives?

General Liability (GL) insurance pricing isn’t based solely on your record. It reflects a mix of national trends, local economics, and emerging risks that affect your entire industry. Let’s unpack the real reasons behind those puzzling premium increases — and what you can do about them.

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1. Inflation and Rising Claim Costs

Even with zero claims, the cost of potential claims keeps climbing. Building materials, labor, medical care, and legal fees all cost more today than they did a year ago.

When it becomes more expensive to repair damage or defend lawsuits, insurers adjust premiums across the board. It’s a form of future-proofing — they’re pricing for tomorrow’s claims, not yesterday’s.

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💡 Did You Know

Most insurance carriers re-evaluate their entire book of business every renewal cycle — even for accounts with no claims. That means your rate can shift slightly just because of how the carrier’s overall portfolio performed that year. It’s not personal; it’s math.

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2. Industry-Wide Loss Trends

Insurance companies monitor the overall performance of industries, not just individual policies. If similar businesses in your trade or region experience more frequent or severe claims, insurers spread that risk across everyone in that category.

So, even if your record is spotless, the collective experience of your peers can nudge your rate higher.

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3. Payroll, Revenue, and Classification Changes

GL premiums are often based on how much business you do — measured through payroll, revenue, or square footage. If your business grew, took on new types of projects, or your classification code changed during an audit, your exposure increased.

For example, shifting from a “carpentry” classification to “remodeling” can land you in a higher-risk category, even if your actual work hasn’t changed much.

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Get your business insurance reviewed today — City Insurance MN makes it simple.

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4. Reinsurance Costs — The Hidden Layer

Insurance companies also buy protection for themselves, called reinsurance, to cover large or catastrophic losses. When global reinsurers face major expenses — hurricanes, wildfires, or mass liability claims — they raise rates for the carriers they insure.

Those increased costs trickle down to policyholders, often well before anyone notices the ripple effect.

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5. Legal and Economic Climate Shifts

Some years, juries award larger settlements. Other times, state laws expand liability or shorten the time allowed to file claims. These legal shifts — even if they don’t happen in your zip code — can drive up premiums throughout a region or state.

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6. Changes in Underwriting Models

Insurance carriers routinely update their rating models. Something as minor as a tweak in a credit-based factor, business density in your area, or new data from small-business surveys can change your premium — even if your business stayed exactly the same.

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💡 Did You Know

Keeping your safety programs and training records up to date can actually help lower your premium. Some carriers offer quiet, under-the-radar credits for documented risk-management practices — but they’re rarely automatic. Asking about them at renewal can pay off.

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Keeping Perspective

A clean claims record still matters. It helps you qualify for better markets, avoid surcharges, and earn credibility with underwriters. But remember: premiums often rise because the world around you changed — not because you did something wrong.

If your renewal arrives higher than expected, ask your agent to review your exposure base, classification, and rating factors. There may be room to adjust — and at the very least, you’ll understand what’s driving the change.

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Frequently Asked Questions

Q: My business had no claims. Can my rate still go down next year?

Yes. If industry losses stabilize, inflation cools, or your exposure base shrinks, your premium can decrease. Strong safety practices and accurate records put you in the best position for favorable pricing.

Q: Why did my friend’s premium stay flat while mine increased?

Different industries, class codes, and payroll sizes trigger different rating factors — even in the same town. One business’s experience doesn’t always mirror another’s.

Q: Will switching carriers lower my premium?

Possibly. Shopping around can reveal if your current pricing is out of sync. Just be sure to compare apples to apples — a lower price doesn’t always offer equal coverage or endorsements.

Q: Can my credit score affect my business insurance rate?

Yes. Many carriers use credit-based insurance scoring during underwriting. Even a small dip in credit can slightly raise your premiums — regardless of your claims history.

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As an independent insurance agency Minnesota drivers trust, City Insurance MN compares multiple carriers to find your best rate.