How to find cheap small business insurance
Running your own business is expensive. Costs like rent, utilities, salaries, equipment, and supplies are all things that business owners must consider. And the weight of these financial responsibilities can add up, especially when you’re just starting out.
Understandably, you want to stretch your money as far as you can, but you probably realize that you can’t risk throwing away everything you’ve worked for because you weren’t insured when a catastrophe struck. Expensive lawsuits, property damage, and other liabilities can happen to anyone who runs a business. But what can make or break you is having the right protection.
So why not find a happy medium?
Get the right coverage, and do it without spending too much money. (See: Everything you need to know about the different types of insurance coverages you may need.) We’ve got many tips on how to find the cheapest business insurance for conscious business owners, such as bundling coverages, lowering your policy limits, choosing higher deductibles, and comparing quotes across multiple insurance carriers.
1. Bundle insurance coverages
Many small businesses are eligible for a business owner’s policy, which is a packaged policy combining general liability insurance and commercial property insurance.
General liability insurance is important for all businesses to consider. In short, it’s a safety net for many of the liabilities small businesses face. The policy covers physical liabilities like property damage and bodily injury, as well as nonphysical risks like libel, slander, copyright infringement, and false advertising. In the event of a lawsuit, this policy will cover lawyer’s fees and court costs, too.
Business property insurance is also crucial for business owners, because it protects the commercial property you rely on to perform your work. This policy covers tools, equipment, inventory, supplies, furniture, and the premises itself.
The great thing about this bundled deal is that you get added protection, and at a lower cost than by purchasing each of the policies on its own. Not only that, but it’s very easy to tack on additional coverages to this package.
Popular business owner’s policy endorsements:
- Electronic data protection: Also known as EDP, this add-on covers damages to media, data, and computers. EDP fills many of the gaps within a standard commercial property policy.
- Employee dishonesty: You aren’t hiring people unless you trust they can get the job done. Sometimes, however, employees prove to be untrustworthy. Should a worker steal from a customer, for example, this coverage will reimburse the business for the loss.
- Equipment breakdown: If you have an office space, odds are you depend on heating, air conditioning, and other appliances to create a comfortable work environment. If one of your units needs to be repaired or replaced, this endorsement will cover the costs.
- Hired & non-owned auto: This endorsement extends liability protection to vehicles you hire, borrow, or rent on behalf of your business. It also provides coverage to employees using their personal vehicle for work-related purposes.
- Moneys and securities: If you handle cash, and it gets stolen, this coverage will reimburse you for your loss.
- Outdoor signs: If your business’ sign is somehow damaged (by hail, lightning, wind, etc.), this endorsement will help repair or replace it.
2. Choose a higher deductible
A higher deductible can make your business insurance more affordable.
Wondering what a deductible is? It’s the amount of money you pay for a claim before your insurance kicks in. Let’s say your deductible is $1,500. You face a client lawsuit, which costs $7,500. To resolve the claim, you must first pay the $1,500, and then your insurance provider will pay the remaining balance.
Depending on the size of your company, your deductible may be higher or lower. Larger operations typically have higher deductibles, and smaller organizations usually choose lower deductibles. This is because bigger businesses tend to have more funds available, and are able to absorb more of the risk (and cost) with the insurance company.
Higher deductibles can save you money, but can be risky.
If you are willing to take on more risk up front (by opting for a higher deductible), your insurance provider will give you a lower rate on your insurance policy.
Most small businesses have low deductibles, hovering around $500–$1,000 per policy. But there’s a lot of flexibility when establishing that price. If you increase your deductible from $1,500 to $2,500, the price of your policy will be cheaper.
Just remember: the higher your deductible, the less expensive your insurance policy will be. But just make sure you can afford your deductible if something unexpected happens.
3. Lower your policy limits
When choosing the level of liability limits for your insurance policy, you are choosing how much you want your insurance provider to pay for a loss. Popular limits vary based on which coverage you are interested in. For example, professional liability limits range from $250K / $250K, all the way up to $5M / $5M.
This means that if you choose limits of $250K / $250K and you have a claim of $300,000, the insurance company would pay the $250,000, and you would be responsible for paying the remaining balance.
The lower your policy limits, the less expensive your insurance policy will be.
But, it also means less coverage. The most popular limits of liability selected for professional liability are $1M / $1M. In fact, over 60% of policyholders have chosen these limits.
If your industry is considered to be low-risk, you can consider going with a lower limit for a cheaper policy. However, if you think you face more liability, choosing higher limits might be a good idea in case something catastrophic happens and you need the coverage.
While we highly recommend having proper protection, paying for too much coverage isn’t always the right choice for your bottom line.
That’s why working with an insurance agent is critical in making the right decision. We can help you choose what’s best for your business and your bank account. Pay for the coverage you require, and nothing more.
Note: You should never sacrifice coverage to save a little money in the short term. Make sure your policy limits are high enough for the risks you face.
4. Value your property correctly
This is especially important with inland marine insurance. While commercial property insurance protects your items on your business premises, or within 500 feet of your location, inland marine insurance protects your business property in transit and off-premises.
Many people overvalue their items when insuring them.
The price of your policy is based on the worth of the items you’re interested in covering. So, if you are valuing your equipment at $10,000, your policy might cost around $250 per year. But if the worth of your gear actually only amounts to $8,000, your policy would have been cheaper had you valued the property correctly when insuring your items.
Be sure your actual cash value is correct when covering your items with inland marine insurance, so you are only paying for what is needed.
5. Choose what’s best for your business
In the short term, you might only be thinking about how to find the cheapest coverage, but be sure you aren’t skimping out on the protection that you and your company need in order to thrive.
Some inexpensive policies don’t provide enough coverage for the risks you face, and that’s why they are so cheap. There’s a delicate balance between what’s affordable within reason and what’s so cheap that you won’t get enough out of it. Be sure to see what’s included and excluded in your policy.
Paying less up front could mean that you may end up paying more in the long run.
If you go with a policy that’s cheap and sacrifice coverage, you may end up having to pay more for a claim if something happens. But if you have the right amount of insurance coverage, your insurance provider will help foot the bill.
A claim doesn’t always refer to a physical loss, like bodily injury or property damage.
We live in a litigious society, and you never know when an unhappy client is going to slap a lawsuit on you.
Sound far-fetched? 36% of small business owners have faced a lawsuit at some point. Let’s hope they had insurance, because buying a commercial insurance policy is almost always more affordable than dealing with a lawsuit.
Choosing an insurance provider with a good rating (like A.M. Best) means that they have financial strength and the ability to provide the right coverage for your business. Companies with poorer ratings, or unrated carriers, typically do not provide the best coverage. In a way, you get what you pay for.
6. Compare quotes from different companies
All insurance companies are different. Some companies specialize in specific types of coverage, like workers’ compensation insurance, which means they could have lower prices than other carriers for that type of policy. Some regional insurance companies can offer more competitive prices in the area they serve. Some companies primarily work with a specific industry, like construction, and therefore can provide better rates than their competitors. And some insurance companies simply have better ratings than others.
All providers have different specialties and strengths, which means the price of business insurance will vary from company to company.
No one wants to spend more money than they need to, especially when it comes to insurance.
But comparing multiple quotes from different insurance companies would take a great deal of time, and you’re busy enough running your own business.
That’s where we come in.
We can save you money.
Our experts at Pogo have over three decades of small business insurance experience. We specialize in helping small businesses find affordable commercial insurance policies, including general liability insurance, professional liability insurance, workers’ compensation, and more.
We compare quotes from over 30 insurance companies to provide you with the right coverage at the cheapest price available. Fill out an application in less than ten minutes. We offer free estimates with zero commitment.