How to Lower Your Costs for Business Insurance
Insurance is an absolute must when you own a business, as there are more risks and liabilities associated with business ownership than you can count. On the other hand, insurance is expensive. Proactive business owners know how to reduce costs for insurance without cutting corners and while still maintaining protection from risk.
The Cost of Coverage
Small business insurance costs can add up when you consider all the different types required. Depending on what your business is, you may need a few or all of these forms of coverage:
- Workers’ Compensation Insurance– In the U.S., most businesses must legally provide workers’ comp benefits to employees. The insurance provides benefits to workers injured or made ill on the job. Your industry and its associated risk level are a big part of determining the cost of this insurance. Other factors include payroll size and your claims history.
- General Liability Insurance– This is important for all businesses. It protects you from a range of general liability claims, like property damage, bodily injury, or slander. The cost is based on the size and condition of business premises and the risk level of your particular industry.
- Property Liability Insurance– Property insurance covers the physical assets of a business, even if you operate from your home. The value of your assets and the risks associated with your industry determine the costs of policies.
- Professional Liability Insurance– Also known as errors and omissions insurance, this policy protects you should you make a mistake offering professional services. Professionals are expected to be experts in their field, so they can be liable for mistakes, like bad advice. The cost of this insurance depends on the number of employees and how much risk you are exposed to. For instance, if you handle high-level assets for clients, you’ll pay more.
- Business Interruption Insurance– This policy type covers things like taxes, payroll, lost profits, and more if certain physical damage to your business leaves you unable to operate for a period of time. The higher your revenues, the more this insurance will cost.
- Commercial Auto Insurance– Commercial auto insurance covers costs associated with accidents that occur when you or an employee is driving for work. Several factors determine costs for these policies, such as how much you drive, where you drive, the demographics and driving records of your employees, and the types of vehicles you drive.
Tips and Tricks for Lowering Insurance Costs
Business insurance is important for mitigating risks, but it is also possible to get good coverage at a lower cost. To reduce what you pay, you can:
- Choose a Higher Deductible– As with any type of insurance, you can get a lower premium cost by raising your deductible, the amount you’ll have to pay when making a claim. It’s a little bit of a gamble, but it can pay off in the end if your risks are low.
- Compare Rates– Shopping for insurance isn’t fun, but it is often time well spent on savings. Check out several policies and insurance providers to get the best possible price.
- Minimize Risk– If you can show your insurance company that your workplace is safe and secure, you’ll get a better price. A safety plan, safety training and equipment for workers, security systems, and other steps to prioritize safety will prove to insurers that your business is low risk.
- Reassess Coverage– As your business changes, so do your insurance needs. Take time to re-evaluate your insurance policies at least once a year. Talk to your agent to find out if you have any coverage you no longer need or can lower costs in any way that makes sense.
- Review Employee Classifications– It’s also worth regularly evaluating how your employees are classified. Codes that identify the type of work employees do, and the associated risks, help determine workers’ compensation insurance premiums. See if you can reclassify any workers into lower-risk codes, but never misclassify anyone.
- Combine Policies– A business owner’s policy (BOP) bundles several types of insurance, often at a lower overall cost. Typical policies include coverage for business interruption, general business liability, and commercial property.
- Revalue Company Vehicles– Stay up to date on the value of company vehicles to lower the costs of auto insurance. As the value of those vehicles goes down, so too should policy costs. Also, update the list of employees driving, as this can change over time.
Reduce Costs, Maintain Protection
The key to reducing costs for business insurance is vigilance. It takes time, but keep up with everything that changes in your business, from employee roles to automobile value and coverage needs. If you can do this, you can change policies as needed and save money while staying protected.