How can I save money on business insurance?
While there are many ways to find cheap business insurance, the key is to bring down your costs without cutting your coverage. Saving money is only a good thing when you’re not sacrificing financial protection just to save a couple of bucks in the short term.
Having the right insurance coverage is important because it ensures the well-being of your business. Should something happen, you’d likely end up saving money in the long run by having the right insurance policies. But in order to do so, you have to spend a little bit of money up front.
Here are a few tips we’ve put together that can help reduce the cost of business insurance for small business owners and self-employed workers.
Tip #1: Shop around.
Prices vary from company to company, because all insurance carriers have sweet spots. One carrier might specialize in helping artisan contractors, while another focuses on serving consultants. If the carrier is regional, the price is most likely better than other national insurance providers.
Typically, the greater the “sweet spot”, the better the rate the company will have. Taking the time to explore your options can often result in a lower price, and without having to change the coverage you desire.
It’s similar to comparing airlines. They all fly to New York, but how they get you there, and how much it will cost you, vary.
Some policies are less expensive because they lack coverage that most policies include.
The key here is to make sure you’re comparing apples to apples — look at how the policies differ, and what’s included and what’s excluded. Most importantly, make sure you know what you’re paying for.
Tip #2: Understand what you need.
Every business faces risks unique to itself. So, business insurance policies should also be unique, and pertain specifically to those risks.
Having protection is great, but there’s no sense in purchasing coverage that doesn’t pertain to your business. Think about what types of risks you face. From there, you can begin to create an insurance plan based on what’s best for your business.
Not sure which insurance policies make sense for your business? Ask one of our experts.
You can also consider how much coverage you need. For example, a policy with a $1 million / $1 million dollar limit will be less expensive than a policy with a $1 million / $2 million dollar limit.
Tip #3: Get the help of an expert.
Insurance can be tough to navigate. If you’re feeling lost, having someone experienced with the terrain can be extremely helpful.
Working with an insurance expert is the best, especially if they’re familiar with your industry — because they’ll know exactly what coverages and which carriers are the best fit for your business. (Meaning, they can save you money.)
If you’re into DIY, we get it. However, if you work with a licensed professional, they’ll be able to figure out exactly what you need much faster than if you were to start from scratch.
Benefits of working with a Pogo Insurance specialist:
- You’ll get an expert opinion at no cost. Our agents get paid by the insurance provider, not by you.
- Our team knows the best way to bundle coverages and save money.
- Because we work with over 30 insurance carriers, our experts know which companies can provide you the best coverage at the right price.
- Pogo agents compare quotes across all of our partners, so we can ensure low rates.
Insurance agents are trained to understand many of the risks involved in business. Not only can they recommend the right coverage, they can save you money by finding the best company to pair you with.
Working with an expert can only help, and if it doesn’t cost you more, then why not? Get a quote.
Tip #4: Choose a higher deductible.
The relationship between your deductible and the cost of your insurance (premium) is like a seesaw. Basically, the higher your deductible, the lower your premium. The lower your deductible, the higher your premium.
A deductible is the amount of money you must pay for a claim before the insurance company starts helping out. If you’re trying to save money up front on business insurance, you can opt for a higher deductible, but make sure you’ll be able to pay the deductible if something happens.
Tip #5: Consider your payment options.
Sometimes you can save money by paying for your policy in full, rather than in installments. If this sounds like something that might work for you, set aside a bit of money throughout the year so you can achieve the full payment. With that, you might be able to reduce your premium without losing any coverage.
Note: Having good credit history and always paying on time can also help cut costs. Be sure to never let your coverage lapse because of cancellation for nonpayment. This could end up resulting in higher rates down the road.
Tip #6: Bundle coverages.
Most insurance companies will provide a discount when you purchase multiple insurance policies. For example, if you’re looking to purchase general liability insurance and commercial property insurance, your insurance provider will offer you a package deal, called a business owner’s policy.
Also known as a BOP, this bundled policy combines two coverages, and it’s less expensive than purchasing each of the policies separately. A business owner’s policy is primarily designed for small low-risk businesses. Check out the prices of a business owners policy.
There are several endorsements that can be added to a BOP. Again, more coverage at a discounted price.
Tip #7: Bundle some more.
If you don’t qualify for a business owner’s policy, there are still other creative ways to bundle insurance.
If the insurance company you are working with sells personal insurance, such as homeowners or auto coverage, they will usually give you a discount if you get multiple lines of coverage with them, so it’s worth checking out.
Tip #8: Manage your risk.
Coming up with a solid risk management plan can reduce your costs significantly.
Think about the answers to these questions:
- What liabilities does my industry face?
- How much would I lose if something were to happen?
- How can I lower the chance of an incident occurring?
If you minimize your risk by setting out good safety procedures, you can keep your rates low by preventing accidents and losses.
Tip #9: Prevent claims.
Insurance companies prefer customers that haven’t had any claims over a period of years, and will sometimes offer a discount for good performance. This is another reason you might want to choose a higher deductible — you won’t be tempted to file small claims.
Note: If you hire workers without insurance, you can be held liable if something happens. This means that the standing with your insurance will be impacted. If you use subcontractors from time to time, show your insurance company that you only hire insured subcontractors.
Tip #10: Find a group.
Many insurance companies will offer a discounted rate for business owners in a similar industry. Ask if they do. For example, if you’re an electrician, you might be able to join an association for electricians, and that association might offer a group discount. There may be a fee to join the group, but just like Costco, you’ll still end up saving in the long run.
Going the route of a professional organization has other benefits, as well. Many offer discounts on professional services or travel options. It’s also not a bad way to network.
Tip #11: Transfer your risk.
If you are adding those working for you as additional insureds to your own policy, that’s an unnecessary added expense for you and your business. What better way to minimize your risk than to take some of it off your plate? Insurance companies actually reward policyholders for sharing risk, or working towards minimizing their risk.
Two primary ways to do this are to require outside contractors to have their own insurance policy, and to avoid using uninsured contractors. Always:
- Make sure they have insurance.
- Ask to be listed on their policy as an additional insured.
When working with outside contractors, be sure they have their own insurance coverage.
In fact, you can take it one step further and ask them to list you as an additional insured on their policy. By doing so, you’ll save money from the cost of an accident or the insurance company raising your rates.
Avoid working with uninsured subcontractors.
If something happens to them while working for you, they can file a claim against you (and your insurance). If you face claims, you will also face a higher premium. The higher the premium, the more you pay.
Tip #12: Trim the fat.
Are you paying for something you might not be benefiting from? If you’re paying for coverage that will never be of use to you, you’re wasting your money.
Tip #13: Price isn’t everything.
Sometimes a bare bones insurance policy isn’t the best deal — maybe the deductible is unaffordable, or it doesn’t provide the right amount of coverage you need. If you’re not getting adequate protection, you could end up losing money in the long run.
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