Insurance is a vital safety net for businesses looking to maintain their financial and operational security. Every day, businesses face risks that could significantly impact operations and lead to unexpected losses if they are not properly covered. While most businesses consider insurance a standard aspect of their risk management, some cut back on coverage with the intention of saving money on premiums. Rather than putting your business at risk for uncovered claims with less coverage, there are ways to reduce your insurance costs without putting your company at risk for losses. The following strategies are safe and effective ways to maintain a strong risk management plan while keeping your premiums at a reasonable cost.
Ensuring you have adequate coverage requires a full understanding of the risks your business could face. While it’s important to have comprehensive coverage, it’s not necessary to have coverages that don’t apply to your specific business. Along with being underinsured, being over-insured is a common problem. Reviewing your current general liability, property insurance, business owner's policy, and employee benefits coverage will help identify any unnecessary coverage that could be removed. Professional consultants can run a risk assessment and ensure coverage is right for the size of your company and considers changes to operations that could lead to being over-insured.
One of the best ways to reduce your premium costs is to shop around with different providers. Oftentimes you can secure the same coverage at a lower price point, especially during a soft market where underwriting is more lenient. In a hard market, premiums will generally be higher across the board, but comparing can still secure you the lowest possible price. Working with an experienced broker who understands your business structure is the best way to leverage competition quotes and secure affordable coverage without sacrificing quality.
Individual policies, especially from different carriers, can incur more expenses than a packaged insurance program. Carriers tend to prioritize clients who have more business with them and may be more generous with pricing. If, for example, you have a separate general liability policy and property commercial policy, packing them together under one carrier can save you a significant amount in premium costs. Most carriers offer incentives for bundled premiums, known as multi-line or multiproduct discounts, which offer discounts of up to 25%. Packaging your policies provides more room for cost negotiation and more security with your carrier.
Insurance coverage premiums are primarily based on the level of risk a business poses to its carrier. Businesses that appear to have little regard for their risks will likely be faced with higher premiums if the carrier doesn’t see proper measures being taken. On the other hand, businesses that have standards for security and implement strategies to reduce their risk will have less chance of a claim, and lower premiums. Policies and premiums are reviewed mostly on an annual basis for business coverage, so ramping up security measures with strict policies and procedures could help you secure a lower premium in the next term.
If you’re just starting your business, plan your business with low-risk operations. For example, measures for property insurance could include a safe location, a newer building, and modern security measures. For cyber insurance, it could mean strong cyber training, private Wi-Fi, and secure authentication methods. As with all coverage, the measures will highly depend on your business's operations, but implementing risk reduction into your daily operations can save you on premiums in the long term.
When you purchase insurance coverage, you can typically secure multiple quotes with different prices depending on the deductible amount. Higher deductibles usually provide lower premiums, as the businesses would be responsible for more financial costs in the event of a claim. Essentially, higher deductibles mean the business accepting more of the risk. If you have a low claim history and feel confident in your risk management strategies, opting for a higher deductible is an easy way to lower your premiums.
Some coverages, including commercial inland marine, property, and auto, require items to be covered on a scheduled basis. These policies are extremely effective for businesses that have high-value items on their business premise or are involved in transportation. Premiums will reflect the value of the scheduled items, and often businesses have items that no longer require coverage still on their policy. Reviewing your scheduled items every 6 months to a year can ensure that your policy is up to date, and only covers what you need insured.
ECBM is dedicated to providing the best cost and coverage for businesses looking to improve their risk management plan. Our customized insurance solutions and financial leakage consulting can ensure you’re getting the best possible deal on your package premiums. We're here to help you better understand your contracts and increase the value of your financial investment. For more information on how we can serve your business, contact one of our agents.