Business Licenses & Permits

5 Ways To Lower Your Business Insurance Expense

Business insurance reduces your financial liability for certain events, but it can cost you handsomely. Trusted Choice Insurance Agents report that small businesses typically pay between $500 and $15,000 for liability insurance. Implement one or two of these tips and you could save thousands a year on insurance costs.

1. Raise Your Deductible

Just like health or auto insurance, a lower deductible means you’ll pay more for small business insurance. It’s a risk, but raising your deductible will reduce your insurance premiums. Just make sure that the deductible is an amount that you’re willing — and able — to pay if the time ever comes.

2. Cut Unnecessary Coverage

At a bare minimum, it’s a good idea for most small businesses to carry general liability insurance. This blanket insurance policy protects you if any injuries or accidents happen in the course of business. It also protects you if a customer or client claims you were negligent.

For other insurance policies, though, ask yourself if you really need the coverage. Other options — like property insurance, professional liability insurance, and product liability insurance — may not be necessary for your business. Review each individual policy’s coverage terms carefully and check for overlap or duplication of benefits with your existing insurance policies. If there’s overlap, you’re probably paying more than you need to for no real benefit.

3. Look for Package Deals

If you do need multiple forms of coverage, consider a Business Owner Policy rather than individual policies. Also known as a BOP, this insurance packages liability and property insurance into one policy. Arthur Murray, editor of HomeInsurance.com, notes that bundled BOPs are often cheaper than buying the policies individually. As an added bonus, BOPs usually also contain business interruption insurance, which can reimburse you for lost revenue due to a property loss.

4. Shop Around

A licensed and reputable insurance broker can help you find the right business insurance policy. Be aware, though, that brokers receive commissions from sales, so they don’t always have an incentive to get you the best deal. Entrepreneur.com recommends that businesses get bids from at least three different brokers, independent agents, and direct agents to get the most competitive prices. You can also use a website like Insureon or InsWeb to get quotes from a variety of insurance providers.

5. Reduce Your Risk

The higher risk your business is, the more your insurance company is going to charge you for coverage. Talk with your insurance company and ask what you can do to prevent losses. Ways to reduce business risk include theft-prevention program, disaster preparation measures, additional human resources training, or workplace safety measures. Less risk means you’ll likely file fewer claims for lower amounts so your insurer may be willing to reduce your rates if you implement his recommendations.

Chapter 5.
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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.