Keep your Business Insurance Costs Low
Running a successful business can be expensive and some days, it can feel like all you do is pay the bills.
So it’s natural to look at your mounting insurance premiums and wonder if it might be possible to reduce those costs just a bit.
The good news is that there are ways to keep your insurance premiums low.
But (and of course there’s a “but”), you have to be sure that the steps you take to reduce your premiums don’t leave you vulnerable to financial disaster should you need to file a claim.
Working with an independent insurance agent and shopping around to compare insurance quotes can help you save money in the long run. But remember, the cheapest policies aren’t always the best policies, and skimping on coverages to reduce premiums won’t offer the financial protection your business needs.
These 8 tips can help you keep your insurance premiums low while ensuring you have the insurance coverage you need to keep your business safe and protected.
Keep your risk factors low
Insurance is a game of risk: If insurance companies believe they will have to make large payouts, they charge more to cover their costs.
Therefore, the less risky your business is for the insurance company, the lower your premiums will be.
Maintaining effective security systems, cyber security protocols, fire alarm and sprinkler systems, for example, will reduce the potential for claims based on vandalism, fire, and data breaches.
Ensuring a safe workplace can also help keep costs low. Employee safety programs, driver training programs, and proper safety signage, for instance, minimizes the risk of an accident that could lead to a large workers compensation or general liability claim.
Maintain up-to-date employee records
Keeping an accurate count of how many people your business employs, and in what capacity, can help keep your premiums low.
If your insurance premiums are based on the number of high risk employees you have, be sure that number is accurate. Inaccurately including too many employees as high risk can raise your premiums. At the same time, honestly is critical. Trying to keep premiums low by falsely misrepresenting how many high risk employees you have can leave you open to having claims denied down the road.
Shop around for discounts
Industry-specific insurance discounts can be a great way to save a little money on monthly insurance premiums. Trade and industry associations, for instance, often offer insurance discounts to their members, so it can be well worth the cost of the membership fee.
Another trick is to find insurance companies that specialize in your specific industry. These carriers may offer industry-specific policies and coverages at more competitive prices with built-in discounts. An independent insurance agent can help you identify potential industry-specific carriers that might be a match for your business.
Raise your deductible
Purchasing a high deductible policy can be one way to keep your premiums low. In exchange for lower monthly premiums, you are agreeing to higher out-of-pocket costs should you need to file a claim.
This can be a great money-saving strategy but it comes with a risk to you. If your business cannot afford high out-of-pocket costs, then staying with higher monthly premiums might be the safer choice.
There’s no “right answer”. Each business must decide what it can reasonably afford should making a claim become necessary.
Buy the right level of coverage
Matching the type of coverages you purchase to your specific business can minimize your premiums. After all, you don’t want to pay for coverages that you are unlikely to need.
Coverage limits matter as well. There’s no need to pay for sky-high coverage amounts if the claims you are likely to face are actually quite small.
Again, the key is understanding your likely insurance needs without leaving your business financially vulnerable to gaps in coverage or limited coverage amounts.
Look for bundles and quantity discounts
Insurance companies often offer bulk discounts or bundle multiple insurance coverages into one policy for lower premiums.
Business Owners’ Policies, or BOP for short, are a good example: by combining general liability and commercial property into one policy, the insurance company can offer expanded coverage at a lower cost to you.
But be sure to read the fine print to make sure you aren’t paying for the same coverages twice. Bundling policies can lead to some redundant coverages if you aren’t careful.
Pay the premium annually
Each year, you will face a choice: pay one big annual premium or break that cost up into twelve smaller monthly payments.
Paying smaller bills monthly can feel more manageable but doing so often means paying a service fee on top of the premium each month.
Paying one large bill up front eliminates that service fee and the hassle of monthly premiums. So if your business can afford to do so, paying the bill up front saves you both time and money down the road.
Review your policies every year
It’s easy to let insurance policies simply roll over each year. But your business has likely changed over the course of the year, and your insurance needs can change as well.
Reviewing your policy each year will ensure that your coverage continues to meet your needs, allow you to eliminate coverages that are no longer necessary, and update your risk factors as well.
An independent insurance agent can help you review your insurance needs each year, and help you make any necessary changes to keep your premiums as low as possible while still ensuring you have the coverage you need for your peace of mind.
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