While commercial insurance is designed to protect your organization’s financial security in certain adverse situations, premiums can get rather expensive. Business owners must purchase several policies to effectively protect their assets by reducing financial liability for various events. At the least, you would need to purchase a general liability policy that will protect you in the event that a lawsuit is filed against you and property insurance to secure the business premises and its contents. The cost of commercial liability insurance for small businesses ranges from a few hundred to a few thousand dollars annually, while the annual business insurance premiums for commercial property insurance can cost approximately $1,000 to $3,000 for every million dollars covered.
Now if you run your business all by yourself, commercial liability and property insurance are all you’ll need. Depending on the size of your business, the premises, and the number of employees, annual premiums can range from a few thousand dollars to well over twenty thousand dollars. Let’s now look at steps business owners can take to reduce how much their business insurance costs them.
Efficient Methods to Reduce Your Business Insurance Cost
Although there are frequent trade-offs, it is possible to lower the cost of your business insurance. The following tips can help you reduce your annual premiums, but before making any choices, be sure to consult an insurance expert and potentially a business advisor.
Shop Around
Different insurance providers may charge widely different premiums for the same coverage, so it’s important that you compare rates. Shopping around for better deals is one of the easiest ways to reduce how much you pay for your policies. You can use a web-based insurance firm to shop for insurance if you are familiar with business insurance and feel at ease to purchase insurance. If not, you can hire an independent brokerage to obtain estimates on your behalf for a more individualized experience. When comparing the commercial insurance prices offered by various insurance providers, don’t automatically pick the cheapest option. Instead, consider the coverage included and the limits of each choice.
Buy Package Policies
A package policy will usually cost less than multiple individual insurance policies. Look for business owner policies (BOPs) that include general liability as well as commercial property insurance. In addition to liability and property insurance, a variety of other commercial coverage, such as auto, crime, and inland marine insurance, can be included in a package policy.
Review Your Auto and Equipment Schedules
You probably have a commercial auto policy to insure your company vehicles against physical damage, as well as a equipment policy to cover moveable equipment. Regularly review the schedule of covered vehicles and business equipment to ensure accuracy before renewing the relevant policies. You may no longer own all the equipment or vehicles listed in the schedule or may have recently purchased items that aren’t listed. Apprise your insurance provider or agent of any such changes immediately.
Pay Premiums in Advance
Insurance providers often offer substantial discounts to business owners who pay their year’s premiums in advance rather than in monthly or quarterly installments. This can seem like a relatively large amount to pay at once, but doing so can save you quite some money over the course of the year. Check with your insurance provider to find out what kind of discount they offer to policyholders who pay the year’s premium in one go.
Look for Overlapping or Unnecessary Coverage
While most business insurance policies don’t replicate other types of coverage, some areas do occasionally overlap. Common examples of this include non-owned or hired vehicles that are covered under general liability as well as commercial vehicle policies. Another example is computers that are insured under commercial property policies as well as electronic data processing coverage. Closely examine your business insurance policies for duplicate coverage and get rid of the overlap, if any.
As your business evolves, reviewing and removing unnecessary coverage for non-existent risks or assets that require minimal protection as time passes is crucial. As an example, you can review and update property policies to explicitly exclude coverage for any previous premises. Additionally, it is advisable to reassess the physical damage coverage for older company vehicles that may have depreciated in value.
Focus on Safety
Have relevant workplace safety plans in place to reduce the chances of mishaps and injuries that can lead to lawsuits. Eliminating the risk of an accident on the premises will lead to fewer incidents and lower premiums. Using workplace safety technology like wearables, smart devices, and safety apps on workers’ smartphones can effectively prevent workplace accidents.
Classify Your Workers Correctly
The premium for workers’ compensation insurance is determined by your business classification, which is based on its operations. The amount you pay correlates with the risk and likelihood of employee injuries in their job duties. It’s essential to ensure your organization is accurately classified in your insurance policy to avoid overpaying.
Add or Increase a Deductible
Raising your deductible is a great strategy to reduce your business insurance premiums. However, it is important to consider that it also increases the potential for higher out-of-pocket expenses if you ever need to file a claim. Ensure that the deductible is an amount that you can pay should the need arise.
Be Active in Trade or Professional Organizations
Trade or professional organizations frequently have affiliations with specific insurance providers. As a result of these partnerships, they can offer their members insurance coverage at highly attractive rates.
Train Your Workers
In order for workers to complete their duties effectively and efficiently, it is imperative that they receive the appropriate training. Employees who have received adequate training are at a lower risk of sustaining injuries while performing their job duties. Furthermore, such training minimizes the likelihood of creating hazardous situations that could potentially harm others. Insurance providers will charge lower premiums for workers’ compensation to organizations that have fewer incidents of workers getting hurt.
Business Insurance is Invaluable
Business insurance may be costly, but lacking proper coverage can be even more expensive and devastating to your hard-built organization. Safeguard your organization, assets, and financial security with comprehensive insurance policies tailored to your specific business needs. By following this guide, you can ensure you only pay for the essential insurance coverage without any unnecessary expenses. Having appropriate insurance for your business offers security and peace of mind that outweigh the insurance premiums you pay.
Frequently Asked Questions
What 2 things could reduce your insurance premium?
A good claims history and effective risk management practices can potentially lower your insurance premium. A clean claims history demonstrates that you pose less risk to the insurance company, which may result in lower premiums. Implementing risk management measures like safety protocols, security systems, and training can reduce hazards, lower claim frequency, and potentially result in premium reductions.
