You went into business to make money – and we want to help make sure your business insurance costs stay in check. When it comes to something as complex as business insurance, though, how do you know if you're paying too much – or too little – for what you're getting? It's a challenge that businesses of all sizes routinely face, and it can have big implications on the health of a company and its bottom line.
Having the most cost-effective insurance plan depends on striking the right balance between achieving enough coverage for your business while avoiding the coverage you don't need. Finding that balance, however, can be elusive.
Get the protection you need
You want to be smart about protecting your business from the cost of an unexpected incident. Insurance is there to cover you if your business suffers a significant loss, but being overly prudent – such as by buying more coverage than you need – is not going to help your cash flow or your business.
Obviously, it's important to get the insurance coverage you need, such as the coverage state law requires you to carry in addition to insurance that covers the actual risks of your business. On the other hand, if your policy covers risks that aren't likely to affect you, then you are probably paying too much for your policy. Take a close look at your policy for risk factors that you can eliminate, based on variables such as your industry, size and even geography. For example, if you are running a small business then you may not need an extremely high ceiling on your liability.
Bundle your insurance for discounts
That being said, beware that only buying the bare minimum insurance isn't a good idea, either. Not only does it expose you to more risk, but you could lose out on discounts that can kick in when you bundle coverage. These discounts may not always be advertised, so ask your agent if you can get a better rate by getting multiple insurance products from the same insurer.
Reduce your premiums
There are many ways to reduce premiums, but two of the best are by implementing a risk management/loss reduction program and paying a higher deductible. A risk management or loss reduction plan shows insurers that you have taken steps to mitigate your business' exposure to risk and loss, which in turn means you are less likely to require a big payout when you file a claim
. Likewise, if you pay a higher deductible, you are transferring some of the risk of your coverage from the insurer to you, which will also help lower your premiums.
Invest your savings
The great thing about saving on insurance is that you can direct those savings back into your business. It’s a win-win! Knowing how to invest savings smartly can position your business for tremendous growth. Not only that, but how you invest your savings could also reduce your insurance premiums even further. For example, you could use those savings to invest in better fire-prevention measures, worker safety training or safer equipment. All those things can then be used to help bring down the overall cost of your insurance.
If you're paying too much for insurance for your business, we want to talk to you! We help business owners find an insurance package
is designed to cover the risks that your business has – and not those that it doesn’t – all with your budget in mind. It all adds up to greater savings and the financial freedom that can help your business thrive.
The opinions expressed here by AmVenture.com columnists are their own, not those of AmVenture.com.