Inputs
How to use this calculator
- Choose an industry risk class closest to your operations.
- Enter revenue, payroll, employees, years, and locations.
- Select exposure toggles like products or alcohol service.
- Add contract limits and claims history for realism.
- Press Calculate to see score, targets, and budget range.
- Adjust one input at a time to compare scenario impacts.
Formula used
1) Risk score (0–100)
The score blends baseline risk, exposure points, claims points, and credits.
Exposure points (capped)
Claims points
2) Coverage targets
OccurrenceTarget = clamp(round_up_to_million(max(1,000,000, OccurrenceTargetRaw)), 1,000,000, 10,000,000)
AggregateTarget = OccurrenceTarget × 2
3) Premium estimate (range)
Premium is a base amount times a modifier stack.
Premium = max(250, BasePremium × Modifier)
PremiumRange = Premium × (0.85 to 1.15)
Example data table
| Scenario | Industry | Revenue | Claims | Controls | Risk Score | Suggested Occurrence |
|---|---|---|---|---|---|---|
| Small office services | Low | $250,000 | 0 | Strong | 28–38 | $1,000,000 |
| Retail storefront | Medium | $750,000 | 1 | Basic | 45–60 | $2,000,000 |
| Small contractor | High | $1,200,000 | 1 | Basic | 60–75 | $2,000,000–$3,000,000 |
| Food service with alcohol | High | $1,800,000 | 2 | None | 78–92 | $3,000,000–$5,000,000 |
| High-hazard manufacturing | Very High | $4,000,000 | 3 | Basic | 85–99 | $5,000,000–$10,000,000 |
Risk scoring structure
This calculator starts with an industry baseline score from 30 to 75. Exposure points then add up to 80 using capped scaling. Revenue contributes up to 25 points, payroll up to 20, employees up to 10, and locations up to 8. Claims add 6 points per event plus a severity term capped at 12.
Exposure sizing inputs
Revenue and payroll are converted into points per $100,000, then capped to prevent runaway results. Foot traffic adds 0, 3, 7, or 10 points, matching typical customer-contact frequency. Contract requirements can add 0 to 16 points because higher limits raise expected severity. Data records add 0 to 10 points to flag privacy-related loss costs.
Claims and control effects
Claims frequency and paid losses also influence pricing. The premium modifier uses a frequency factor from 0.90 with no claims to 1.70 with five. Severity can add up to 18% when paid losses approach $250,000. Controls reduce impact through both a score credit up to 8 and a premium modifier down to 0.85.
Coverage target interpretation
Recommended occurrence limits are derived from a blended exposure estimate: 2% of revenue, 1% of payroll, and 20% of required contract limits. The occurrence result is rounded to the next $1,000,000 and constrained between $1,000,000 and $10,000,000. Aggregate is set at two times occurrence, reflecting common underwriting structure. Umbrella suggestions begin at $1,000,000 when the score reaches 60 and increase with risk.
Budget planning scenarios
Use scenario testing to align budgets with risk appetite. For example, moving from basic to strong controls can reduce the modifier by about 15%. Raising the deductible from $1,000 to $5,000 can reduce the modifier from 1.00 to 0.86. Adding alcohol service increases the exposure modifier by 18%, often shifting a moderate profile into high. Compare your premium range before and after each change and document the assumptions for internal review cycles.
FAQs
Q1. What does the risk score represent?
It is a 1–99 index that blends baseline industry risk, exposure size, claims history, and control quality. Use it to compare scenarios consistently, not to predict a specific loss outcome.
Q2. Is the premium estimate a real quote?
No. It is a planning range based on simplified rating factors. Actual pricing depends on carriers, territory, prior coverage, detailed operations, and underwriting review of applications and loss runs.
Q3. How do claims affect the result?
Each prior claim adds points to the score and increases the premium modifier. Paid losses also raise the modifier up to an 18% severity cap, so frequent or severe claims move both score and budget upward.
Q4. Why do contract limits change recommended coverage?
Contracts shift required limits and expected severity. The model adds contract points and uses 20% of the contract limit when setting occurrence targets, then rounds to standard $1,000,000 steps for usability.
Q5. When should I consider an umbrella policy?
If your score is 60 or higher, if you have multiple locations, or if contracts exceed standard primary limits. The tool suggests umbrella amounts that can exceed $1,000,000 when risk or requirements increase.
Q6. How can I lower the risk score?
Improve documented controls, reduce high‑severity exposures, and manage claims. Examples include stronger training and audits, better subcontractor oversight, safer customer areas, and product quality processes. Recalculate after each change to track impact.
Notes
- Use consistent units: annual dollars, last three years claims.
- Higher contract requirements can drive higher suggested limits.
- Strong controls typically reduce score and premium pressure.
- This tool is educational and not an insurance quote.