Discovering efficient ways to operate your company and reduce uncertainty is a balancing act. Therefore, purchasing a business insurance policy is the best approach to mitigate and manage some of the inherent risks that accompany routine, day-to-day operations.
Unfortunately, commercial rates increased by 7.1 percent in the fourth quarter of 2020 due to higher loss cost trends and lower interest rates. Even before the unprecedented impacts of a global pandemic, companies began witnessing the effects of a hardening insurance market and higher insurance rates.
Like other challenges facing businesses, it is unclear when the hard market may abate. Even with that uncertainty, there are ways you can gain the best value for your dollar. So, here are six cost-saving factors to consider as you navigate the market and make decisions about your coverage.
1) Bundle Insurance Coverages
Some business owners may maintain multiple policies with different insurance companies. For example, a company might purchase general liability coverage from one insurer and cyber coverage from another. By bundling all your essential business coverages into a Business Owner’s Policy (BOP), you can reduce your total premium costs and save money. As a bonus, having only one policy can make handling your insurance renewals less time-consuming. Just look out for redundancies by reviewing your policies thoroughly. There is no reason to pay twice for the same coverage.
For more atypical and complex exposures that cannot be bundled, turn to an expert in that line of insurance to receive the right coverage.
2) Re-Evaluate Your Deductibles
It is simple math. There are two sure ways to lower premiums. First, lower your limits of insurance. Second, increase your deductibles. We never recommend compromising coverage and protection for your business. Opting for a higher deductible on your business insurance policy is a better way to reduce the cost of your annual premium.
But, before choosing a higher deductible, consider your cash flow and risk tolerance. How much money out-of-pocket is available to repair your business or replace its contents after a claim? For example, larger firms may manage deductibles in the many thousands, while smaller companies might run on a more fixed margin. There is no hard rule. You will have to evaluate your needs and decide the right deductible for your business.
3) Look for Discount Opportunities
Every insurance provider is different, but many offer lower prices for combined business coverages, like the discounts given to consumers for the bundled homeowner and auto policies. For example, purchasing a BOP will save you money because of its already bundled general liability and commercial property coverage. Some carriers may also offer add-on policies and industry-specific discounts. The discounts are out there; you just need to discover them.
If you are uncertain of what discounts an insurance carrier provides, ask your agent. They can explain the different policy combinations and present deals. Additionally, your agent might have tip sheets, training sessions, or carrier programs to help you better manage risk and protect your business. Premium credits, claims-free discounts, loss-prevention programs, and group rates could all result in savings.
4) Pay Your Premium Upfront
If you have never bought small business insurance before, it may seem like a no-brainer to choose to spread out your payments over the year. However, you can typically reduce your final costs and save money by paying your entire yearly premium upfront in one fell swoop. Plus, it is one less bill to account for each month.
If you can comfortably afford your premium upfront, go for it. When cash on hand is low, paying in two, four, or ten installments may be the better option. It costs more, but you are not putting up a hefty chunk of change all at once.
5) Review and Update Coverages Annually
It can be tempting to see the policy renewal, mechanically make the payment, and let it roll. But reviewing and updating your coverage every year is an important component of owning a business. You may discover the need to adjust your current policy or purchase additional protection. If your business model, size, geographic market, payroll, or exposure have changed over the year, make sure your coverage reflects these new adjustments. If you have questions about your policy, connect with your insurance agent. They can ensure you receive the appropriate coverage for your business needs while getting the most for your money.
6) Minimize Risk in Your Daily Operations
It does not matter the size of your company. One of the best ways to lower your insurance cost is to minimize risks. The safer your business is, the less your coverage will cost. By identifying potential threats, creating a risk management plan, and possessing the right insurance coverage, you can be financially ready if the unexpected happens.
Think ahead and implement common-sense measures to help guard your business. A safety training program or risk management review will help lessen the possibility of you needing to make a claim, therefore ensuring your premiums avoid uncontrollable rate hikes. Preventable losses are avoidable losses.
Bottom Line About Small Business Insurance
The rising market will likely continue throughout 2021. When it comes to your approach toward cost-savings, what is right for one company may be unreasonable for another. Therefore, you should review your coverage options, update your policies, follow your agent’s recommendations, and mitigate risks to ensure your company receives the appropriate insurance at the best rate. As experts in small business insurance, we can assist you during these uncertain times and handle all your needs without breaking the bank.
Looking for a better Small Business Insurance Policy? Get a Quote through DRS Insurance Group.
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DRS Insurance Group is an independent insurance agency located in Indialantic, Florida. Our team is here to help you with a quote, analyze your current coverage, and answer any questions you have.