Guest Article
At the helm of every successful small business is a leader who’s mindful of expenses and vigilant about costs. You also know that uncontrollable factors are a regular risk of doing business, which means small business insurance isn’t an optional expense.
So how do you reconcile the need for insurance with the additional cost? By using these six ideas to make sure you’re only paying for the coverage you truly need. Whether you need professional liability insurance (E&O coverage), a business owners policy (BOP), errors and omissions coverage, or a general liability policy – or more than one – the following six tips will help you save money on small business insurance.
1. Buy direct. In the past, you had no choice but to buy insurance through a broker, but the Internet has greatly increased your options. One such option is the ability to buy directly from the insurance carrier. The policy options you’ll get are just as customized, and the service you’ll receive is usually very responsive. This option may not be for you if you are more comfortable with face to face meetings with your local insurance agent.
2. Bundle insurance products. The insurance industry is a crowded field with insurers competing fiercely for small business clients. You can take advantage of this by having all of your policies with the same insurer or moving your small business insurance from one company to another.
Both actions usually result in rate reductions, which vary widely. Some insurers, like Hiscox, offer up to a 15% rate reduction when you move your policy to them, and buying more than one product can earn you up to a 5% discount.
It can sometimes be cheaper to purchase a policy that combines the coverage you need, such as a Business Owners Policy (BOP), which bundles general liability and business property, such as equipment, coverage. Most policies provide standard coverages and liability limits that meet the needs of a wide range of small businesses, however you also have the option to add upgrades as needed.
3. Implement smart risk management. Risk management simply means taking as many precautions as possible to avoid having to call on your business insurance. Many insurers offer premium reductions for following their recommended risk management practices, which can include workplace safety, disaster preparation, and human resource intervention.
Premium reduction strategies like security systems and fire prevention measures also warrant discounts, and for certain coverages, just having an official insurer inspection may reduce premiums. Most insurers are up-front about these available discounts, but if your agent forgets to bring it up, you can ask. Ask again at renewal time, as your insurer may have added a new program since last year.
4. Choose a higher deductible. Electing to have a higher deductible is the same thing as taking on more of the risk, which insurers reward with lower premiums. However, it’s important to choose a deductible that you can cover. While it may make sense from a cash flow perspective to choose the highest deductible and lowest premium, it would likely expose your business to a serious risk. Saving 35% on a policy with a $5,000 deductible will do you no good if you don’t have access to that kind of cash if you have a claim.
5. Work from home. So many small businesses and entrepreneurial ventures start off as virtual teams with each person working from a home office. This technique saves money on office space, but did you know it can reduce your insurance premiums for business insurance as well? Many insurers, including Hiscox, offer rate reductions of up to 10% for insured who work from home. Be sure to ask your insurer or agent about a similar program.
6. Avoid extra fees. It might seem like all insurance companies allow customers to pay for their policy in monthly installments, and many do. But they also charge more for the privilege of breaking up the policy price over a year. Ask your insurer if they charge a premium for the monthly payment option. If they do, ask them to waive it, or consider getting a quote from an insurer that does not charge for this, like Hiscox.
Many of these cost-saving techniques warrant an annual review. Each year, set aside a day to review changes to your business and possible policy changes. If you’ve got coverage duplication or a policy on a business unit that’s been sold you can eliminate them and realize those savings.
Just keep in mind that even more important than saving money is making sure you’re getting the right coverage for your business. Whether you’re renewing insurance coverage you’ve had for years or are comparing quotes for your first small business insurance policy, be sure to work with a specialist who really understands the risks you face and your insurance needs.
About the Author: Kevin Kerridge is the director of small business insurance for Hiscox, a company that provides customized business insurance for small business professionals such consultants, IT professionals, graphic designers, and many more.
Hiscox small business insurance is underwritten by Hiscox Insurance Company. Inc., a Chicago-based insurance company that is licensed in all states and DC. The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Please consult your professional advisor.
Disclosure: Hiscox Insurance Company compensated the publisher of www.succeedasyourownboss.com to publish this post.
If your business has several employees that you offer health insurance benefits to, you could probably take a big chunk out that bill by installing a “wellness program” which everybody gets a physical and some common sense incentives to improve their health. Not only will lower your health insurance costs, but it will improve your employee’s morale, productivity, and retention.