Insurance can be a significant expense to any business. But there are several strategies that you and your agent can employ to help lower your premiums. In this article, we’ll discuss seven proven strategies to help you lower your business insurance premiums without sacrificing coverage.
The first thing that you need to understand is your business’s risk profile. This will help you determine the types of coverage you need and the level of coverage you need.
Your risk profile depends on several factors, including the industry you operate in, the size of your business, and the number of employees you have. For example, a chemical manufacturer has a much different risk profile than a landscaping company.
Deeply understanding your business’s risk profile will prevent you from purchasing unnecessary coverages or too much coverage.
You know yourself better than anyone else. That seems like an obvious statement but is an important consideration when putting together your business’s insurance program with your agent.
Are you perfectly comfortable without Employment Practices Liability coverage? How comprehensive does your Business Interruption coverage need to be for you to sleep well at night?
Your agent should advise you and present you with the best information possible, but these decisions are ultimately yours.
Another common way to lower business insurance premiums is by increasing your deductibles. This transfers more risk to you and allows the carriers to offer a lower premium.
Work with your agent to build an insurance program that works best for you.
With the prevalence of commercial insurance raters and API integrations, there is no reason your agent shouldn’t be getting multiple quotes from across the insurance marketplace.
Sometimes premiums can be negotiated. Sometimes they can’t. But it’s always worth the ask.
A little counterintuitive to the last point, you will typically have more negotiating power the longer and more loyal you’ve been with a carrier. If you’re shopping insurance every year, they are going to be less likely to negotiate because a) they figure you’ll do it again next year, and b) they don’t have enough premium from you to justify decreasing below their initial underwriting outcome.
It’s somewhat arbitrary, but best practice seems to be to go out to market for multiple quotes every 3 to 5 years.
If you’re purchasing multiple policies (Property, Liability, Auto, etc.) it is often less expensive to get them in a “package” from one carrier.
In fact, oftentimes a Business Owners Policy (including Property and Liability coverages) is less expensive than a standalone General Liability policy.
This isn’t always the case, so work with your agent to develop the best program for you.
There are many different risk management practices you can employ to be a more attractive business for insurance carriers, thus lowering your premiums. Having a formal safety program, implementing emergency procedures, and having regular inspections to identify possible hazards are all examples of risk management practices that carriers will take into consideration.
Even if you’re not going out to market every year, you should be having renewal conversations with your agent to make sure your program reflects your operations. As your business grows and makes changes, your insurance policies need to evolve with it.
Insurance is an important (and in many cases, required) product that allows businesses to focus on growth while transferring their risk. These strategies are a good start to minimizing that expense as much as possible. Ultimately, having an insurance professional that you trust in your corner is the single biggest determining factor in the quality of your insurance program.
The good news: the best ones don’t cost any more than the rest.
