Purchasing business insurance is a vital part of running a strong, stable business. No matter how smoothly the business is going, catastrophes like sudden disasters causing property damage, car accidents, and third-party injuries are inevitable. Wise business owners can’t risk losing their business and profits to expensive property repair and replacement, ridiculously high medical bills from injury claims, and lawsuits.
But let’s be honest: commercial insurance premiums can be very expensive. And of course, nobody wants to pay more than they should.
With all the costs associated with running a business, it only makes sense to find ways to save money. The good news is you can reduce the cost of your commercial insurance premiums while keeping your business protected from unforeseen catastrophes.
Here are 8 steps you can take to significantly lower your business insurance premiums.
1. Evaluate your policies yearly
Review your policies thoroughly every year and make sure everything you’re paying for is necessary. You should also maintain a detailed assessment of your business model and how it matches your premiums.
Make sure you’re not over or underinsured. Here are several measures you can take:
- Update your insurance file
- Look for unneeded or overlapping coverages
- Maintain a detailed inventory of your auto, equipment, and supplies
- Review your list of current employees and make sure you’re not paying high prices for workers you no longer employ
2. Communicate with your insurance agent
Don’t hesitate to give your business insurance broker or agent a call when there are things you don’t understand. Ask them to sit down with you as you methodically review your insurance policies. Ask questions about the changes in your business, adjustments to your business model, and whether or not these changes might lead to an adjusted rate.
This is also an opportunity to ask about premium reduction strategies. Your business insurance broker may offer options for reducing your insurance cost like increasing your deductibles, switching insurers, or obtaining discounts.
3. Increase your deductible
Raise your deductible, the amount you’re responsible for paying when filing a claim, and you can quickly lower your premiums. It’s basic math. Just make sure your biz can afford to pay that deductible up front by the time a claim is necessary. Evaluate your needs, income, and other factors to determine how much deductible you can comfortably pay.
4. Minimize risks
One of the major drivers of higher insurance premiums is claims. A full year or longer without the need to have a claim will influence your rates to go lower. The good thing is disasters that make you file a claim can sometimes be preventable.
You’re less likely to have on-site accidents, like slips and falls, if you give your employees the necessary health and safety training. You’ll minimize property damages due to fire if you have fire extinguishers in place and if your employees know how to effectively respond. You’ll reduce the possibility of vehicular accidents if you set high standards for your drivers and require clean driving records.
Having a safety training program or a risk management plan will help you reduce the risks and the likelihood of you filing a claim. Determine the possible risks your business may face, and take the necessary measures to prevent them.
5. Do background checks on employees
Operate a “safety first” business by hiring the best people possible. Doing background checks on your employees will help you minimize potential risks of theft, criminal acts, and property damages due to negligence.
Set high standards for your company vehicle drivers by requiring driver education, safety classes, clean driving records, and even drug testing. The same goes for your other employees. Let them obtain the necessary government IDs and clearance certificates.
6. Improve health, safety, and security in the workplace
Insurance companies want to insure responsible clients who care about their employees’ and guests’ health and safety and do everything in their power to protect their physical properties.
Health: Workers’ compensation and health insurance premiums will be lower if your workforce is healthy. Adopt a no smoking policy and encourage exercise, sufficient breaks, and a healthy diet.
Safety and security: Create a safety plan to eliminate hazards that can cause accidents, injuries, and lawsuits. Consider safety training in the workplace and driver training programs. Installing security systems too, as well as fire sprinkler systems.
7. Bundle your insurance products
You can save a bunch when you buy in quantity or combine your coverages. For instance, you can purchase a Business Owner Policy (BOP) which combines the fundamental insurance types (commercial property, general liability, workers compensation, and commercial auto insurance) at a lower bundled rate.
Just look out for redundancies and make sure you’re not paying twice for the same coverage.
8. Pay premiums up-front
Like in any form of a payment plan, you pay extra fees for the privilege of stretching out the cost. You can reduce your final costs by paying up-front. If that seems too much for your budget, you can save up this year for the next year’s payment.
Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.