Every Business needs insurance to protect its assets from unexpected losses however insurance can be costly. Business insurance premiums have been rising, on average, at about 10% a year for the last couple of years with some businesses seeing 20% or more annual increases. The reason for these premium increases are many and include persistent inflation, construction labor shortages and wage increase, rising material costs and increased litigation.
Fortunately, there are steps you can take to reduce the cost of insurance.
Buy Package Policies
Another way to reduce the cost of business insurance is to buy a package policy rather than several individual policies. A package policy will provide you with property as well as liability coverage and can include such coverages as business auto, crime, loss of income and inland marine to name a few.
Review Your Auto and Equipment Schedules
Has your business insured cars or trucks for physical damage under a commercial auto policy? Have you insured moveable equipment such as bulldozers or cameras under a commercial property or equipment policy? If the answer is yes to one or both of these questions, you should review the schedule of covered vehicles or equipment before your policy renews to make sure it’s accurate. If you no longer own all of the property and equipment listed on the policy you may be paying more premium than is necessary.
Pay Premiums in Advance
Because insurance can be a substantial expense, many businesses prefer to pay the premium in monthly or quarterly installments rather than all at once. Insures, on the other hand, like to collect all of the premium when the policy is issued. Accordingly, some may offer a discount or other incentive to policyholders who pay the entire premium upfront. You should check with your current agent to see if your insurance carrier provides a discount for paying in advance.
Look for Overlapping or Unnecessary Coverages
While most commercial policy forms don’t duplicate other types of insurance, overlaps may occur. Example: hired and non-owned autos may be insured under both a general liability and commercial auto policy. Similarly, computer equipment may be insured under both a commercial property and an electronic data processing (EDP) policy. Businesses change over time and your business policies may cover risks that no longer exist or some risks may still exist but require less coverage due to the passage of time. One example is saving money on your commercial auto policy by eliminating physical damage coverage on older vehicles.
Focus on Safety
An effective workplace safety plan can help you reduce or eliminate hazards that can lead to accidents, injuries, and lawsuits. Fewer losses mean lower premiums. A good independent agent can help you create a plan to increase safety.
Classify Your Workers Correctly
Every business that purchases workers’ compensation coverage is assigned one or more classifications that reflect the nature of its operation. Because the rates you pay for worker’s compensation depend on the classification assigned to your business, it is important to ensure your business is classified correctly. Based on the nature of your business operations you may be eligible for a classification which can reduce your premiums. Further the individual worker classifications within your business can also affect your workers’ compensation premium therefore you should check to see if some of your employees can be moved into lower risk classifications which will save you premium.
Add or Decrease a Deductible
A common way of reducing insurance premiums is to add or increase a deductible. Deductibles are a type of self-insurance and are commonly included in property and auto policies. They are sometimes applied to property damage claims covered by liability policies. When adding or increasing a deductible, be sure the amount you select will be manageable as an out-of-pocket expense.
Train Your Workers
Well-trained workers are less likely to sustain on-the-job injuries, Training is especially important for vehicle drivers. Distance driving is a major contributor to the increase in vehicle accidents in the U.S., so employers should implement a written distracted driving policy. Employers can evaluate the effectiveness of their training program by using telematics to monitor drivers’ behavior.