You're in business to make money. One way to increase profit, of course, is to cut expenses. The savvy small business owner can wring substantial savings from his or her commercial insurance.
The key, of course, is to reduce costs without gutting your coverage. Saving is great, but you cannot put your venture at risk just to save a few dollars.
Following are nine tips for reducing your commercial insurance premiums without hurting your business:
1. Shop your coverage with several providers
Commercial insurance providers evaluate risk according to algorithms that can spit out very different quotes from the same information. That means you could find substantially lower rates than what you're paying without changing your coverage simply by shopping around.
How often should you shop your business policy? Most financial experts recommend you do it annually. One thing to consider: Some carriers offer loyalty bonuses. See if yours does before you make a decision.
2. Bundle with a business owner's policy
A business owner's policy combines several common types of protection together (e.g. property, business interruption and some liability) into a single plan, often at a lower price than an owner could get by shopping for the coverages separately.
However, read the policy carefully before you sign. Many BOPs don't include auto insurance or professional liability insurance. Most don't cover workers compensation. You could need separate policies for these.
Related Article: How Your Business Credit Affects Insurance Premiums
3. Consider a different kind of bundle
Some commercial insurance providers also sell home and car insurance. Why does that matter? Carriers often provide price breaks when you buy multiple lines of coverage. If yours does, you could save big without touching your coverage.
4. Evaluate your protection and your risks
Take a thorough look at your policy and make sure you don't have coverage you don't need. If you don't use a vehicle for your business, for example, you likely don't need commercial auto insurance. If you don't have employees, you don't need employment practices liability coverage. Bottom line; make sure you're not insuring yourself for a risk you don't face.
5. Increase your deductible
Many policyholders of all types don't realize the relationship between their deductible and their premiums. In a nutshell, all other factors being equal, the lower your deductible, the higher your premium.
So a good way to lower your premiums is to raise your deductible. However, remember that you'll have to pay that deductible before you receive any help on a claim, so make sure you set it at an amount that you can come up with in a hurry.
One other benefit: the higher deductible will discourage you from filing smaller claims. Keep reading to see how this can help.
6. Is there a claims-free discount?
Providers love policyholders who don't file claims. If your business has been claims-free for a period of years, you could be eligible for a discount. This is why it's a good idea to avoid filing smaller claims.
Be sure to ask about this as you're evaluating carriers.
Related Article: Risky Business: Protecting Yourself Against Product Liability Claims
7. Ask about loss-prevention programs
Talk with your provider about ways you can reduce risk in your business. These could include starting a workplace safety program, instituting disaster preparations, and initiating a theft-prevention plan. All these will reduce the risk of a claim, which is why you might get a price break.
8. Look for group rates
Many providers offer group rates for businesses that fill the same niche. Ask if your provider does; if not, explore purchasing your commercial insurance through a professional organization. You might have to pay a fee to join the organization, but you can recoup that quickly through reduced premiums. Plus, membership in the professional group could give your business a higher profile and could lead to important contacts with peers.
9. Change your payment method
This varies by provider, but you can reap substantial savings by paying your premium in full upfront. Commercial auto insurance providers, for example, can discount a year's premium by up to 15% if they get paid in a lump sum.
Another avenue to explore: authorize an electronic funds transfer.
By treating your commercial insurance as a planned expense instead of as an afterthought, you might be able to reduce the amount you spend while maintaining full coverage. It takes a strategic approach to accomplish this mission, but it could well be worth it to your bottom line.