Business insurance can be expensive, but the cost of a lawsuit, medical bills, or accident can put you into bankruptcy.
Protect your business by purchasing the appropriate insurance policies; save money by following these tips to reduce your premiums without sacrificing coverage.
As with any substantial purchase, you need to shop around and compare prices before you decide on an insurance policy. Determine what kind of coverage you need and ask several different insurance companies for quotes. Many companies offer online tools that let you estimate your coverage premiums and compare prices.
- Make sure that your current coverage fits your needs -- it should neither leave you inadequately insured, nor give you coverage that you're never going to use.
Increase Your Deductible
Insurance companies tend to offer lower premiums if you choose to have a higher deductible. The deductible is the amount that you are responsible for should an accident or other qualifying event occur. The higher the deductible, the less often an insurance company has to pay out. If a fallen tree branch incurs $1000 in repairs and you have a $750 deductible, you're unlikely to bill the insurance company for the other $250.
- Only increase your deductible if your business can afford to pay that amount up-front should damages occur.
Buy in a Bundle
Oftentimes you can save money on your various insurances by bundling them into a Business Owners Policy. A BOP can combine property, liability, automotive, and income insurance premiums into a rate that is lower than paying for those policies separately.
- As mentioned above, make sure you're not paying for insurance you don't need when you buy a BOP.
- Some businesses require specialty insurance that isn't standard in a BOP; you may end up having to purchase riders or a separate policy in order to be fully covered.
Look for Group Rates
Depending on what sector your business is in, you may be a member of one or more professional organizations, such as a union, business association, rotary club, or veteran's group. You may even be required to join one of these groups, depending on your business type. These organizations may offer group rates or discounts on your insurance premiums, so look into the benefits that come with membership and take advantage of them.
- Feel free to join a professional organization that offers these perks, but that shouldn't be your only reason for joining -- don't be that person who joins a club but only shows up for the free dinners.
Reduce Your Risk
The rates you are offered by insurance companies depend on a number of factors -- the insurance carrier itself, the type of business you run, the local cost-of-living, and the amount of risk there is for an accident or other qualifying event. Decreasing the likelihood of an accident occurring at your business is another way to reduce your monthly premiums.
- Ask your insurance agent what kind of discounts are available in exchange for safety improvements to your business. Some of these improvements can be as simple and inexpensive as placing rubber-backed mats on slippery floor areas or installing handrails on your front steps.
- A security alarm or new sprinkler system may be more costly to install -- but could also pay for itself in insurance discounts long before it needs to be replaced again.
Once you've purchased a policy, review your coverage and rates annually to ensure that your business is still adequately covered despite any changes you may have made over the course of the year.