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Businesses are required to have some types of insurance. They benefit strongly from other, non-required types. Unfortunately, insurance can get expensive. How can your business save money on insurance?
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Businesses are always exposed to financial risk. There’s a chance a hurricane could hit your business, destroying your equipment and rendering it inoperable. Or one of your employees or customers could slip and fall on the premises, rendering you liable for their injuries. There’s a chance a hacker could cause your business to lose sensitive data—and millions of dollars in the pursuit to restore it and undo the damage.
Insurance is the best way to guard against these financial risks. Businesses are required to have some types of insurance. They benefit strongly from other, non-required types. Unfortunately, insurance can get expensive.
How can your business save money on insurance?
Save Money on Insurance by Understanding Your Needs
First, you should understand that there are many different types of business insurance. Moreover, not all of them are strictly beneficial or necessary. In most states, you’ll be legally obligated to purchase workers’ comp insurance, so there’s no wiggle room there. If you purchase property, you’ll definitely want property insurance. So you can’t save money on insurance by dropping either of these.
But not all policies or forms of coverage are this valuable. Additionally, you may not need comprehensive coverage on everything.
The amount of coverage you attain will correlate closely with how much you pay to maintain those policies. Accordingly, you should deeply analyze your needs before purchasing. Then only invest in policies that are the most appropriate for your business. This will help you to save money on your insurance premiums.
Purchase Stronger Buildings and Equipment to Save Money on Insurance
In many cases, you can save money on your insurance rates by investing in stronger buildings and higher quality equipment other assets. For example, if you have a steel building, your property will be much less likely sustain damage in the event of a natural disaster. What’s more, it will be more resistant to ongoing deterioration. For these reasons, insurance providers are often willing to extend you a discount, saving you money on insurance.
Invest in Risk Mitigation
Next, consider investing in risk mitigation. Depending on the nature of the insurance policy you’re trying to save money on, there are several strategies worth pursuing. For example, you could invest in additional security to improve loss prevention. Or you could conduct regular safety inspections to improve safety in your factory. If these risk mitigation strategies meet with the approval of your insurance provider, they could collectively qualify you for a steep discount, thereby saving you money. This is because the chances of your filing a claim will significantly decrease.
Save Money by Shopping Around for Your Insurance Policies
You’ll save money by shopping around for your insurance policies. Too many business owners buy insurance from the first company they happen to find. After even a rudimentary search, you can often find someone willing to offer you a similar (if not identical) policy for less. Just make sure you’re comparing those policies apples to apples, since even small variable changes can lead to different costs.
Bundle Your Insurance Policies
When possible, bundle your insurance policies and you’ll save money. In other words, buy all your policies from a single provider. Many insurance companies and agents are willing to extend a multi-policy discounts to businesses that do this. In short, bundling your insurance policies can ultimately save you hundreds or even thousands of dollars.
Increase Your Deductibles
In the insurance world, a deductible is the amount of money your business will be required to pay out of pocket before the insurance policy kicks in. Let’s say your $30,000 company car gets involved in a collision and the deductible is $2,000. The cost for repairs is $5,000. Your business will be responsible for paying $2,000, while the insurance policy should cover the rest.
Increasing your deductible will usually leave you with lower monthly insurance rates, saving you money in the short term. However, this isn’t always a favorable tradeoff, since you’ll be responsible for paying more in the event of a claim.
Though it will only save you a bit of money, you could qualify for a small discount if you pay a certain way. For example, if you pay for six months of coverage rather than one month at a time, you might earn a discount of five percent or more.
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Consider Factors Other Than Cost
Finally, you’ll need to consider factors other than cost. It’s tempting to shop around for the cheapest insurance policy. Remember, though, insurance is designed to protect you from financial risk.
In many cases, it’s better to pay a bit more for more comprehensive coverage. It’s a good idea to look for a better deal, but don’t let your desire for lower premiums obfuscate your desire for financial protection. Shopping for insurance will always require a careful balance between these priorities.
Shopping for insurance as a business owner isn’t fun. However, once you have a strong network of insurance policies in place, your business will be much better protected. What’s more, you’ll have greater peace of mind while operating your business.
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