How can a company lower its insurance cost?
With all of the expenses that come with running a business, it makes sense to cut corners wherever possible. While business insurance premiums are a must for conscientious businesses, there are ways for a prudent business owner to get the most bang for his or her buck. Just as you shop for the greatest price on supplies and weigh the pros and cons of utilizing this provider versus that supplier, you should compare rates from competing carriers, as well as other ways to save your premiums.
1. Keep risks to a minimum
Insurance companies want to insure consumers that are responsible. A safety training program or a risk management assessment can assist lower the likelihood of having to file a claim, ensuring that your premiums don’t rise at an uncontrollable rate. Losses that could have been avoided are losses that could have been avoided. “An ounce of prevention is worth a pound of cure,” said Benjamin Franklin, and he was talking about fire prevention, oddly enough.
2. Sort employees into appropriate categories.
Many industries have high rates of worker injury, and if you or your employees mistakenly fall into one of these groups, you may end up paying unreasonably expensive premiums. Resist the urge to dismiss potential threats. If you tell your agent or broker a lie, you may find yourself without insurance when you most need it. Notify your insurance company as soon as possible when new employees join or leave your company, as this can affect your premium expenses. When you have a question about adequate coverage, it’s advisable to consult with your agent or broker.
3. Enhance security measures
Insurance expenses can be reduced by installing security systems, fire sprinkler systems, worker safety programs, and driver training programs, to name a few. If you work with sensitive client data, it’s equally critical to follow strict security protocols to limit your risk of being hacked. Insurance companies assess risk, and your agent or broker should be able to assist you in identifying issue areas so that you may implement a program that is effective for your company.
4. Review policies on an annual basis.
It’s all too easy to see a policy renewal, make the payment mechanically, and move on. You have a lot on your plate as an entrepreneur, and examining an insurance statement may not be one of them. It’s tempting to jump right into the next new task, but it’s in your best interest to sit down and go over it step by step. In fact, call your agent and ask about any changes in your business, changes to your business strategy, or rate changes that you see. This is another chance to make sure you’re protecting your company to the best of your ability while also lowering the amount you pay to do so.
5. Purchase in bulk
Buying your insurance in bulk can save you money, just like buying paper towels in bulk can save you money. Business owner policies are excellent vehicles for obtaining the coverage you desire at a lower cost. Just keep an eye out for redundancies by thoroughly evaluating your policies. There’s no reason to pay for the same coverage twice. If your business is unique and requires specialized coverage, you may need to add a rider to your policy.
6. Make a one-time payment of your premium.
If you’ve been on a payment plan, you’ve almost certainly been charged a fee. Paying in advance can help you save money in the long run. If that seems like too much money, you should take this fiscal year off and save for next year’s payment. If it hurts at first, tell yourself that it’s a smart business practice that shows you’re serious about preserving your company. If paying in advance appears to be an impossibility, it could be a sign of impending problems. Poor cash flow can be a problem for a financially-strapped company, which you should discuss with your accountant or CFO.
7. Make changes to your deductible
It’s simple math: if you raise your deductible, your premium will be lower. When determining what your organization can fairly afford in the event that a claim is required, the algebra comes into play. Larger companies may be able to afford deductibles in the thousands of dollars, whereas smaller businesses may operate on a tighter budget and want to spend less. There are no hard and fast rules. Each employer will have to assess its own requirements and determine how much of a deductible it can afford.
8. Look for bargains
Ask for discounts, don’t be hesitant to ask for them. Look for trade organizations in your business that might assist you in finding insurance cost savings. There may be carriers that specialize in your sector and can provide you with the particular coverage you require at a lower cost. The deals are out there; all you have to do is look for them. Look for industry-specific publications to learn about cost-cutting opportunities.
9. Purchase adequate insurance coverage.
You must hunt for coverage that suits your firm appropriately, just like Goldilocks looked for a chair that was just right for her. If you buy too much coverage, you’ll end up paying for something you’ll never use, but if you buy too little, you’ll end up with coverage gaps that leave you vulnerable. A dedicated broker or agent will be on hand to explain everything in detail and protect you from having too little or too much coverage.
While pricing is a crucial consideration when acquiring insurance for your company, it may be a case of penny wise and pound dumb to put too much emphasis on it. Other crucial aspects, such as the claims process or the rating of the insurance carrier that supplies your coverage, can have an impact on your experience. Take your time and do business with someone you can trust and who can provide you with excellent recommendations. When it comes to spending your money, it’s always a good business practice to conduct your homework and invest carefully, and getting insurance is no different.