As a company owner or decision-maker, you know that the cost of operating a business has gone up significantly in recent years. You also understand that lowering your expenses—whenever and wherever possible—helps your bottom line.
One of the areas where you may be able to save some money is on your small business insurance. No matter how challenging business conditions become, you can’t afford to be without coverage. One significant liability lawsuit can result in a financial burden that could be overwhelming to your company. But there are several ways to spend less on insurance while still being adequately protected from risk.
9 Tips For Lowering Your Business Insurance Costs
To lower your insurance costs while maintaining good coverage, you’ve got to be proactive. But the time and effort you invest in researching your options and making important decisions about your insurance strategy will pay dividends.
Here are nine ways to save on business insurance:
- Evaluate your business risks and insurance needs. Business insurance is critically important, but nobody likes shopping for it. Consequently, it’s not uncommon for a company to say, “Just give us the works” when buying insurance so that they can move on to other matters. However, upon more careful consideration, they might make some discoveries. For instance, they might realize that there are policies they don’t need, limits that are higher than necessary, or other aspects of their insurance portfolio that are driving their costs up unnecessarily.
- Get prices from multiple insurance providers. You might think that every insurance company will have roughly—if not exactly—the same price for a particular type of policy. However, that’s not the case. Providers assess risk and determine rates in part by feeding information about your business into algorithms, and no two algorithms are the same. Consequently, there can be significant differences in what two companies quote you for the same type of policy.
- Ask about bundling. In some cases, you may pay less when one policy provides multiple types of protection. For example, many business insurance companies offer what’s called a business owners policy that combines general liability insurance and commercial property insurance.
- Don’t “set it and forget it.” The insurance coverage that is ideal for your company today may not be right one year from today. As your business evolves, your insurance strategy should evolve with it. For example, your workforce may be smaller in a year, or you might sell equipment you no longer need because your service offerings have changed. You should review your policies at least annually to assess whether you should modify your coverage.
- Inquire about lowering your payment-related fees. It takes insurance companies time and effort to process installment payments. That’s why many will offer significant savings if you pay your premium in full at the start of your policy period.
- Ask your insurer about discounts for loss-prevention programs. Both you and your insurance company have a vested interest in lowering your risk. Some will provide discounts on premiums to businesses that initiate workplace safety, theft prevention, or other programs.
- Operate your business as safely as possible. A workplace safety program can potentially earn you a premium discount, but it can also reduce the number of claims you report. And since your claims history is a factor in determining your insurance rates when you renew your policies, fewer incidents can mean lower costs.
- Increase your deductible. Generally speaking, deductibles and premiums are inversely related—the higher your deductible, the lower your premium. However, there is a critical caution with this approach:You must be able to pay your deductible if you file a claim.
- Be inquisitive and persistent. Some business owners avoid asking what they feel is “too many” questions of an insurance company. But it’s in your best interest—and also the insurance company’s—for you to end up with adequate and affordable coverage. If it takes one conversation with a sales representative to reach that point or a dozen interactions, you’ve got to be sure you have all the information you need to make a good decision. And often, a conversation with one potential provider will bring up something you want to ask of a company that you spoke with previously.
When In Doubt, Prioritize Protection
There is no reason you can’t lower your business insurance costs while maintaining proper coverage. However, you should always “err on the side of caution.”
If changing a policy in some way will save you money but makes you think you might not have enough protection, don’t make that change. It’s much safer to have a little too much coverage than not enough.
Fortunately, as you do more research, you become a better-informed and more confident business insurance consumer. Then, when it’s time to make decisions about your coverage, you’ll be prepared to make them wisely.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.