When you’re running a business, you’re always interested in finding new ways to bring down your expenses. Whether this means the cost of your office supplies or your liability insurance, reducing your expenses can help you grow your business and make it more profitable.
Having said that, you need comprehensive insurance to protect your company from financial loss resulting from unexpected property damage, customer accidents, or on-the-job injuries. Without adequate insurance coverage, you run the risk of facing hefty government fines and costly lawsuits – not to mention the damage to your reputation.
The set of policies you need, such as general liability insurance, professional liability insurance, property insurance, and workers compensation, can add up to a significant financial commitment.
If you work in a high-risk sector, this can make insurance costs even higher. But you need insurance to run your business legally and mitigate the serious ramifications of an accident. What can you do to reduce your business insurance premiums while still maintaining the necessary coverage, so you don’t compromise your company’s future and your employees’ safety?
As a business owner, knowing the answer to this question can be a huge help. So let’s find out.
What Is An Insurance Premium?
A premium refers to the amount of money you pay for insurance coverage. You can pay for your insurance either every month or every year. Premiums are calculated based on several factors, which include:
- The risk factors inherent to your business
- The likelihood that you will make a claim
- The number of employees your company has and how dangerous their profession is
- The value of your business assets
Review Your Coverage
The first thing you need to do is review your current insurance plan and make sure you don’t have more insurance than you need. You might still be paying for employees who have left the company or equipment you don’t have anymore.
Check your commercial auto, equipment, and property policy and see if you still own and use everything that’s listed. If not, then you need to contact your insurance company to adjust your policy accordingly.
Next, you’ll want to check your company’s payroll to make sure you’re not still paying insurance for employees that no longer work for you. Keep in mind that employee driving records have a significant impact on your commercial auto insurance, so if someone with a less than ideal driving record has left, you can save money by adjusting your policy with your insurance company.
Likewise, you’ll want to check if your employees are correctly classified on your workers’ comp. The class codes on your workers’ comp inform your insurance provider of the type of work each employee does. If some of them are incorrectly classified as having high-risk jobs, you’ll pay higher insurance premiums.
For example, you might have someone that works in sales misclassified as a production worker. Deliberately misclassifying employees to save money can result in serious penalties since it leaves them without the necessary coverage, but reviewing the class codes is a good way to spot costly errors.
Reassess Your Insurance Needs Annually
You should perform the review we discussed in the previous section every year. Many small business owners are so busy because they have to wear multiple hats and they often don’t allocate enough time to this important task.
Why is it important?
Because your business is constantly changing – and so are your risks. We already mentioned that not doing this review can result in paying to insure equipment you no longer use or employees that have left your company.
When it comes to vehicles and equipment, you also want to ensure the premiums are based on their depreciated value and not the full market value.
Suppose your business grew or shrank significantly compared to the previous year. In that case, you’ll also want to talk to your insurance provider and make the necessary adjustments so you don’t pay for coverage you don’t need. Doing some comparison shopping every year will let you see the cheapest business insurance quotes online and give you a realistic idea of how much you can save.
You can also save money by getting a comprehensive package. Don’t make the mistake of assuming all you need is general liability or business owner’s policy. It’s not that simple. You need to figure out what risks are inherent to your business and what kind of coverage you need for those risks.
This can include property insurance, vehicle insurance, professional liability insurance, product liability insurance, business interruption insurance, and so on. It’s usually cheaper to bundle all the different types of insurance you need and get them from just one provider instead of several. Generally speaking, the more business you’re bringing to one provider, the more willing they’ll be to negotiate premiums.
Lastly, depending on your company’s ownership structure, you may be able to save even more money by combining your personal and business insurance. For example, you might consider getting commercial auto insurance for your car if you sometimes use it for work since personal car insurance excludes business-related risks.
It might even be cheaper because it will be part of a bundle.
Sites like Insuranks.com are great for this since they let you compare offers from multiple providers.
Make Safety A Priority
There’s nothing insurance companies love more than risk reduction, so making safety a priority will make them more willing to offer you lower premiums.
You’ll want to start by securing your business assets, ensuring you have an effective security system on-premises. You also need to provide your commercial vehicles with adequate security. Stay up to date with new technologies so you can implement them to your benefit.
The next step is to lower the chance of workers’ comp hikes by training your employees in workplace safety practices. Employees need the training to perform their work-related tasks safely. Well-trained employees are less likely to sustain injuries or injure someone else.
You’ll first need to identify possible hazards in your working environment by analyzing common hazards in your industry and past incidents. Then you’ll need to determine how you can address these hazards through safety policies and training. You can develop your own training program or bring in a third party to do it for you.
Use these tips and tricks to save you significant amounts of money, both now, and in the future.