How to Reduce the Cost of Your Small Business Insurance

Every small business faces the same challenge—you know you need insurance for the big “what-ifs,” but struggle with the increase overhead that doesn’t directly lead to an increase in your bottom line.

For most business owners, it isn’t worth the risk to go without insurance, so they employ other ways of saving money: by minimizing the cost of their business insurance policies.

Here are several ways our clients at Citizens General have been able to reduce the cost of their insurance premiums, without sacrificing the important coverage they need to protect their business.

Increase Coverage Deductibles

Deductibles are the amounts your business pays before an insurance policy will begin paying on a covered claim, and increasing them can greatly reduce your overall premiums. By taking on a little more risk in the form of a higher deductible, your business lowers the likelihood of filing a small claim. In return, the insurer’s risk -- and the premiums they need to charge -- are lowered.

This strategy isn’t right for every business, particularly those with limited funds who can’t cover a larger deductible if push comes to shove. But for those with the cushion to afford it, raising the deductible only increases risk by a defined amount, and the corresponding premium decreases are usually substantial.

Take Advantage of Discount Programs

Just as insurance companies offer discount programs on personal policies, many also offer discounts on commercial policies. The available discounts vary depending on policy, but there are typically several your business might qualify for.

Everything from employing only drivers who have commercial licenses, to paying premiums in full may net you significant savings on the cost of coverage.

What’s the fastest way to find discounts? Ask your agent!

A quick call or email will get you dialed in on all the possible savings, and back to work quickly.

Employ Risk-Mitigation Practices and Devices

Insurance cost is directly related to the level of risk your business faces. In some cases, you may qualify for reduced premiums by instituting risk-mitigation practices and/or devices that lower the likelihood of a claim.

For example, your business might be able to lower premiums in exchange for:

  • Using high-quality personal safety equipment
  • Installing monitored security surveillance systems
  • Conducting employee safety training seminars

Even something like upgrading to ergonomically designed desks might qualify for a workers compensation discount, because ergonomic equipment reduces the risk of job-related injury (which workers compensation covers).

A number of carriers, such as The Hartford, have a built-in margin to their standard pricing to allow for discounting. Have low employee turnover, or a low manager-to-employee ratio? Is your business a drug-free workplace? Do you have a limited claims history?

The fastest way to find out which discounts you might qualify for is to delegate the investigating to your insurance agent, who can quickly find out where your most valuable and immediate insurance savings might be hiding.

Keep a Clean Claims Record

Speaking of claims, keeping a clean claims record is a great way to keep your insurance premiums as low as possible. Obviously insurance is there if you need it, but having an insurance record without claims or limited claims let’s the carriers know your business is a good risk for them to take on.

If your business has a history of periodic claims, a carrier will need to factor this risk into their pricing model to make sure the premium makes sense should a claim arise. Higher risk = higher premium.

By enacting business practices to internally reduce the risk of a claim, you’re more likely to keep crystal-clear claim report which keeps your premium toward the lower end of your risk spectrum.

Bundle Coverage with a BOP

One of the most effective ways to reduce your business’ insurance premiums is to bundle coverage with a Business Owner Policy (BOP).

A business owners policy is a package policy that combines foundational coverage together. Most policies come with three primary coverages, with others possibly being offered as options. The three primary coverages are :

  • General Liability Coverage, to cover common accidents and advertising claims
  • Commercial Property Coverage, to cover a business’ physical and personal property
  • Business Interruption Insurance, to cover certain extended losses in revenue

Other coverage may be offered if needed, which might include cyber liability insurance, commercial auto insurance, employers liability insurance.

To find out which policies your BOP would need to include, you’ll save time by going directly to your agent or broker, who can quickly assess your situation, and find your insurance sweet spot for maximum savings and coverage.

Ask Your Agent for Help

Your agent or broker works with insurance products all day, and also sees other clients win and lose in business. They’re in a unique position to advise you on which policies and protections you can reasonably skimp on, and which ones will be crucial to the safety of your business.

To make sure your business has the right coverage for its specific situation, utilize the assistance of a knowledgeable insurance agent or broker. A professional who has worked with other businesses will not only know what risks yours might face, they’ll be able to help you avoid duplicate coverage, and protect against gaps in the fine print that could leave you vulnerable to liability.

Paying insurance is never fun, but mitigating the risk makes sure that if something does go wrong, you’ll be able to see another day. Talk with one of our agents today to make sure what you’re keeping your costs as low as possible, get a free online quote in minutes through The Hartford to compare your rates online.

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