No matter what kind of business you own, it is at risk. You can be a one-man (or woman) operation, or have a single employee who helps you you operate out of your home. From franchise owners to small and medium sized business owners, business insurance is the key to survival. But that doesn’t mean you have to overpay for this critical coverage.
Here are five ways to get lower rates without sacrificing the quality of your insurance coverage:
1. Review Your Business’ Current Insurance Policies
How up-to-date are the policies that you already carry?
- If you have had changes to your employee roster, you could be able to save on workers’ comp insurance.
- Your commercial auto policy may be cheaper if you have sold vehicles or lost employees with less-than-stellar driving records.
- Have you moved to a new location, or sold office equipment? Your commercial property insurance rates could have changed for the better.
You may be able to uncover substantial savings on your insurance policies simply by keeping them updated.
Examine your existing policies or talk with your insurance broker to see if changes in your business could mean a lower rate on your existing coverage.
2. Increase Your Deductible Amounts
Want to save money on your insurance premiums? Increasing your deductibles is a tactic many business owners use in order to lower their premiums and increase their available cash flow.
Before you increase your deductibles, however, be sure that your business can afford the higher amounts in the event of a claim. The reason you carry insurance in the first place is to protect you from the high costs of accidents, injuries, lawsuits, and unforeseen incidents that could devastate your business. If you have chosen a deductible that is completely unaffordable, your business is still at risk.
If you don’t have the resources available to cover the increased costs of your deductibles, your insurance policy isn’t protecting your business.
If you have enough funds set aside to pay for increased amount of your deductibles, raising them can be an easy way to reduce your premium rates.
3. Don’t Let Business Insurance Coverage Lapse
One of the most important things a business owner can do is to select the right policies to protect their business, and then maintain that protection. Letting coverage lapse during an off-season or slow time may sound like a good idea at the time, but it won’t save you any money.
When you have no-lapse coverage for your business, many insurance companies will offer you a discount on premiums.
If you have a prior cancellation for non-payment on a policy, you may find yourself ineligible for coverage. If you can get coverage, a history of dropping policies and picking them back up again can flag your business as high-risk, leading to higher premiums in the future.
If you get in a tight spot and need to prioritize your business expenditures, don’t skip payments or temporarily drop insurance policies. Instead, contact your insurance broker to look for other ways to save on your business coverage rates.
4. Avoid Small Claims
Don’t sweat the small stuff. Your past claims history is a major factor for determining your insurance premiums. And if your business has had several small claims, it can signal a larger risk than if you had one large claim. The more risky your business appears, the higher your premium amounts will be.
If you have a minor incident that your business can afford to pay for out of pocket, it could be beneficial to absorb that small loss and save your insurance for a larger claim. You can check out this blog we wrote for some tips on how small businesses can avoid insurance claims.
5. Combine Coverage
Your business is worth protecting from every possible angle. And most business owners find that they need more than one policy in order to fully defend themselves from the potential risks that could financially cripple their companies.
Some of the more common risks to your business, and the average cost to deal with them, include:
- 40% of businesses are likely to face a property or general liability claim.
- A general liability claim can average $75,000 to defend and settle.
- 20% of business owners will face burglary or theft.
- The average cost of a burglary claim is $8,000.
- 10% of businesses will face a fire claim.
- The average cost of a fire claim is $35,000.
- 5% of businesses will face claims for vehicle accidents.
- A vehicle accident claim can average $45,000 for your business.
General liability may be the foundation policy for your business, but it won’t protect you from auto accidents, property damage from fire, burglary, or theft.
Insurance companies recognize that you will need more than one policy to completely protect your business, and most will offer a discount to you for combining (bundling) your coverage. Combine your general liability policy with commercial auto, for example, an you could receive a discount on both.
Business insurance is a necessary part of doing business. But you can get the best coverage and protection possible for your business without overpaying for it.
To keep your rates affordable, remember…
- Keep your policies up to date
- Don’t let your coverage lapse
- Avoid making small claims if you can afford to take care of them yourself
- Increase your deductibles if you can afford them
- Combine multiple policies to get the lowest rates