Eight ways to reduce your insurance costs (without compromising coverage)
It’s no surprise that everyone is feeling the financial crunch these days – especially if you’re a small business.
You may need to find some creative ways to save some money any way you can. Here are a few ways that both small businesses and consumers may be able to cut down on the costs of their insurance premiums without compromising their coverage.
- Shop around.
Prices vary from company to company, so it pays to shop around. The easiest way to do this is to work with an independent agent who has access to a variety of carriers. Make sure you work with someone who understands your business. It is also important to pick a company that is financially stable. Check the financial health of your potential insurer with rating companies such as A.M. Best and Standard & Poor’s.
- Look at group rates.
Purchasing your insurance through a business or professional organization can save you money. The savings typically outweigh any member dues. General business organizations, such as your local Chamber of Commerce and the Better Business Bureau also offer business insurance discounts. Your local home-based business association may offer lower prices on home-based business insurance.
- Choose a higher deductible.
Deductibles represent the amount of money you pay before your insurance policy kicks in. The higher the deductible, the less you will pay in premiums for the policy.
- Consider a package policy.
A Business Owners Policy (BOP) is often significantly less expensive than a self-designed plan. BOPs include: property insurance for buildings and company owned contents; business interruption insurance, which covers the loss of income resulting from an insured event (such as a fire) that disrupts the operations of the business; and liability protection, which covers a company's legal responsibility for the harm it may cause to others.
- Set up a risk management/loss reduction program.
Insurers will often lower your rates if you put a program into place that will minimize losses from fire, theft and employee and customer injuries. These can include workplace safety training programs, disaster preparation and human resource intervention. Consider installing a security or fire system. If your line of business uses vehicles, install anti-theft devices and hire drivers with good driving records.
- Consider relocating your business.
Deciding whether to relocate depends, to a large extent, on what kind of business you operate and where you move to. Moving from a downtown area to a suburb, for example, may reduce premiums on your property and vehicle insurance, and even your workers compensation insurance.
- Work closely with your agent or broker.
An insurance professional can provide invaluable advice to help protect your business. It is important to keep your insurer informed about any changes in your business operations. This includes major purchases, expansions or changes in hiring or in the nature of your operations.
- Have the right amount and type of coverage.
Having the right amount and type of coverage along with a carefully developed business plan that includes disaster preparedness can save you money in the long run. Be sure to keep your agent fully apprised of any changes within your business that might necessitate changes to your insurance coverage. Such changes may include: adding employees, expanding your business, increasing your inventory or materials, and purchasing major equipment such as tools or vehicles and adding suppliers.
Now some of these items may sound simple. However, I continually visit with consumers and small business owners and often find that they overpay on their insurance. I have discovered incorrect addresses, coverage for buildings, personal property and vehicles that the owner no longer owns and policies that are pieced together rather than packaged.
These are items that can greatly affect your insurance premium.
I know, many of you don’t like to deal with your insurance, but that is why you have an insurance agent. Now is a great time to pick up the phone and set up a time to review your coverage – to make sure you’re getting the most for your money.