The secret of running a successful business lies in increasing profits while managing expenses. Undeniably, business insurance is a critical business expense. You can’t ignore the importance of buying insurance coverage. But at the same time, you can take measures to minimize the cost.
You should know how to reduce business insurance premiums for your small business/side hustle.
But before we discuss how you can lower your business insurance cost, it’s vital to know why your business needs insurance coverage.
Insurance plans can protect you from unexpected financial loss in the event of workplace accidents/mishaps. Your policy will also protect you from losses due to natural disasters or fire breakouts.
Further, it demonstrates that you value your employees and customers and builds credibility. And most states require you to get sufficient business insurance coverage to abide by the law.
While you can choose insurance plans based on your requirements, here are the most common insurance plans available for small businesses:
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
- Home-based business insurance
- Business owner’s policy
- Workers’ compensation insurance
- Cyber liability insurance
Now it’s time to explore how to save money on business insurance.
Carefully Choose the Right Plan
First, assess the coverage needs of your business. Are there any local laws about buying specific insurance plans? What about industry standards? If your business is in a high-risk category, you may need comprehensive insurance plans. Also, consider your claim potential during the planning phase.
Be careful when choosing an insurance plan.
Get a reasonable amount of coverage your business would need. Neither overspend nor underinsure your business.
Don’t unnecessarily get extensive coverage when you don’t need it. That’s because it will only increase business expenses and reduce profitability. On the other hand, your finances would suffer if your business doesn’t have sufficient insurance coverage.
Comparison is a Must
It’s never a smart idea to buy the first insurance policy you come across. Always shop around and get estimates before choosing the right option.
You may find many insurance providers nearby. So, evaluate their plans and benefits. Then compare insurance premiums, payment terms, claim process, limitations, insurer’s credibility, and other important factors. This approach will make it easier to choose the best-fit option.
When it comes to reducing the cost of business insurance, you should look for insurance companies specializing in your industry. They can offer more suitable policies at lower rates. Also, you can negotiate terms and pricing to get a good deal.
Look for Discounts
It’s perfectly okay to ask for discounts.
Discuss insurance plans with your insurance agent. Ask them for advice on how to bring down insurance costs as well as potential discounts on insurance plans.
Some insurance providers offer special discounts if you pay your insurance premium in advance instead of making monthly payments. So, ask your agent if you can get such benefits by making advance payments quarterly or annually.
Review Insurance Policies Annually
When buying an insurance plan, the insurer may ask you to subscribe to their autorenewal service. You may be tempted to do so since it saves you from the hassle of manually making payments and renewing your plan. But it’s recommended not to do so.
The best practice is to review your insurance plans annually. Your requirements might change by the end of the year. Or you may have better insurance options available when it’s time to renew your plan. So, make the most of this opportunity and find out what’s best for you.
Methodically review your existing insurance plans on an annual basis. Discuss your changing requirements with the insurance agent. You can also compare your current plan with other insurance policies available for businesses operating in your industry.
Bundle Your Insurance Policies
Your business may need multiple types of business insurance policies. Some of these plans may have overlapping coverage that only ends up increasing the overall insurance cost.
Do you know how to reduce business insurance premiums? You can do it by bundling insurance policies instead of separately buying multiple plans.
Insurance companies offer tailored packages to cover various risks under a single policy. For instance, Business owner’s policy combines general liability insurance and commercial property insurance into one policy. It can offer coverage from liability claims, property damage, and income loss due to business interruption.
Bundling insurance plans helps save costs on business insurance. Also, it’s convenient since you can easily manage all your insurance matters with a single plan.
Join Industry Organizations
Be proactive and join professional organizations within your industry. Not only will it help you stay on top on industry trends but also help you get the support your small business needs.
Professional trade organizations within your industry can better guide you about insurance matters. Or they may assist you in getting insurance at lower cost. Some organizations also have affiliations with insurance companies. So, they offer policies at discounted rates to members. You can benefit from these offers by joining local organizations.
Maintain a Good Credit Score
Your business’s financial health plays a crucial role in determining the cost of business insurance.
A strong credit history suggests responsible financial management and stability. It gives the impression that your business is less likely to default on premium payments or file frequent claims.
So, you can potentially secure better rates on your insurance policies by maintaining a good credit score.
Never Downplay Potential Risks
It’s important to maintain honesty and accuracy in your business insurance practices. Intentionally misclassifying employees as lower risk to cut premiums may seem tempting. But this strategy can lead to significant setbacks down the road.
What if you underinsure your employees and they get into an unfortunate workplace accident? The coverage would be insufficient to cover the cost of their treatment or disability claims. As a result, your business will face drastic financial strain.
So, do what’s best for your business and employees in the long run.
Also, never withhold critical information from your insurer. Provide a truthful assessment of your business risks to ensure you have the appropriate coverage. Additionally, when any employee leaves or a new hire joins you, make sure you report it and make necessary policy updates.
This proactive approach safeguards your business against unforeseen liabilities and ensures your insurance aligns with your evolving needs.
Arrange Regular Employee Training
Empower your employees with proper training and safety measures. This will boost their performance and play a pivotal role in lowering insurance premiums. Further, invest in essential safety gear to minimize the risk of injuries.
Well-trained and well-equipped employees can perform their duties with confidence. They won’t have to worry about their safety or life-threatening accidents. So, it can foster a secure work environment while promoting peak performance and productivity.
Many business owners ask, are business insurance premiums tax deductible? The good news is this business expense can be deducted from your taxable income. So, buy a good insurance policy to protect your business interests and successfully run your business without worrying about unforeseen situations.