How much does an average business spend on commercial insurance? A simple answer is, it depends.
The cost of annual commercial insurance premiums varies from one business to another. The major factors that impact these costs include:
Industry: What’s the amount of risk involved in the work?
Claim potential: What’s at stake? It could be human (customer or employee injury), property (inventory, building), or something else (intellectual, data breach, etc.)
Requirements: Is your business legally obligated to have certain policies. The most common policies include health, worker’s compensation, and general liability business insurance.
Despite how your insurance costs look today, there are steps you can take to protect your business in a cost-effective way.
How to Save On Business Insurance
While there are various ways to get cheap business insurance, you should aim at bringing down the cost without comprising your coverage. Saving money will only make sense when you’re not sacrificing your coverage so you can save a few dollars in the short term.
It is important to have the right coverage for your business as it ensures its well-being. In case an incident covered in your policy happens, you’re likely to save money by having proper coverage. But for that to happen, you’ll be required to spend some money upfront.
Below are some tips that can help reduce the amount you spend on commercial insurance. Read on and learn more:
1. Shop Around
For you to get the right coverage at a reasonable price, you need to compare different policies. Request a quote from various insurance companies.
You can also decide to work with an independent agent. These agents represent multiple carriers, meaning they’re able to shop around for you so you can get a fair price.
2. Understand Your Insurance Needs
Every business has its own unique risks, and business insurance policies should pertain to those risks.
While having protection is great, it makes no sense to buy coverage that does not pertain to your business. What risks does your business face?
By answering this question, you’ll be able to buy an insurance plan that’s best for your business.
3. Work with an Expert
Navigating through the various types of insurance is not easy and sometimes you can feel lost. Working with an expert experienced with the terrain can be much helpful.
Work with an insurance expert, especially those who are familiar with your industry. This way, you can save you money because they know what coverages and carriers that are best for your business.
A licensed professional can help figure out your insurance needs compared to if you were to do it yourself.
4. Consider Payment Options
You’re likely to save money when you pay your policy in full, as opposed to installments. If this seems right for you, set aside enough money to help you pay the full premiums for the year. Through this, you’ll likely reduce your insurance cost without compromising your coverage.
You can also cut costs by paying your premiums on time and having a good credit history. To avoid cancellation for nonpayment, never let your coverage lapse. Cancellation can lead to higher rates in the long run.
5. Select a Higher Deductible
There’s a great correlation between your deductible and the cost of your premiums. Generally, when you choose a higher deductible, you’ll pay a lower premium and vice versa.
A deductible refers to the amount of money you agree to pay before your insurance company can start paying your claim.
If you’re looking to save money upfront on business insurance, you can decide to choose a higher deductible. However, be sure you can raise the amount if something happens.
6. Consider Bundling Policies
You’re likely to get a discount when you buy multiple insurance policies. For instance, if you want to buy commercial property and general liability business insurance, your provider can offer you a package deal, known as a business owner’s policy.
The business owner’s policy, also known as a BOP, is cheaper than buying each of the policies separately.
However, not all policies are bundled. For a clearer picture of bundle coverages, talk to a professional in that area of insurance.
7. Be Proactive
Implement everyday measures to ensure your business is protected. Insurance companies offer discounts to customers who have not had any claims over an extended period.
Protect your Wi-Fi network and electronic devices with passwords, prepare a safety manual for employees, have a fire suppression system, etc.
If you’re unsure how to go about this, consult your insurance agent. Your insurance provider might have tips sheets or even formal programs that you can use to protect your business.