9 Money Saving Tips for Buying Small Business Insurance
Starting a business is one of the biggest decisions you’ll make in your career — and often the most rewarding. But no matter how due diligent you are in the planning stages of your business, you will assume an element of risk as a business owner that is unavoidable.
Fortunately, business insurance can help mitigate risk once your business gets off the ground, giving you the peace of mind to focus on what’s important: managing and growing your business.
Finding the right business insurance policy can be a highly frustrating experience for most entrepreneurs. That’s why we’ve gathered the best advice from experts in the industry to save you time, money, and let’s face it, some sanity. Here’s a list of 10 tips experts recommend following in your quest for the right policy.
1. Get the right amount of coverage
No two businesses are exactly alike, even if they are in the same industry. A pet-care business focusing on dogs will face a different set of risks than a bird business. Experts recommend starting with the basics. General liability insurance covers your business for any third-party damages incurred such as property damage, injuries, or incidents that occur on your premises, legal fees, and reputational damage due to libel, slander, or copyright infringement.
But be careful not to waste money insuring your business against a risk you don’t face. For example, if you don’t hire employees, there’s no reason to pay for employment practices liability coverage.
2. Bundle your coverage
A more affordable route is to purchase a business owner’s policy (BOP) which combines protection from major property and liability risks into one package.
BOPs save small business owners time and energy in trying to figure out exactly what coverage to purchase. Keep in mind that BOPs don’t include everything — such as business interruption or professional liability, to name a few – which is why experts recommend making a list of all areas potentially at risk.
3. Take advantage of discounts
Some insurance carriers will offer discounts or price breaks on add-on policies. For example, if you purchase your commercial auto and workers compensation coverages from the same carrier as your business insurance, you may be eligible for a multiple lines of coverage discount.
4. Seek out stability in a carrier
There are over five thousand insurance companies in the United States according to the Insurance Information Institute. Unfortunately, not all of them are solvent. Experts recommend looking at a carrier’s credit worthiness via A.M. Best, Standard & Poor’s, Fitch or Moody’s. Another trick is to review the company’s financial statements. You want to save money but not at the expense of an unpaid claim should you need to file.
5. Work with a reputable agent
An independent agent can help you compare rates and coverage more efficiently than if you try doing it yourself, freeing up time for you to focus on business planning. Seasoned agents can draw upon industry experience to identify hidden risks unique to your business that you hadn’t even considered.
6. Understand ways to prevent losses
An effective loss prevention program can help you prevent losses and can be a viable way to reduce your overall business insurance cost. Whether you implement a workplace safety program or institute disaster preparations, programs like these can help reduce the risk of a claim or help you choose a different deductible amount.
7. Inquire about claims-free discounts
Carriers sometimes offer a claims-fee discount for policyholders who don’t file claims for a specified period of time. Experts recommend presenting a copy of your existing company’s loss experience when obtaining a quote for a new company to see if you qualify.
8. Be flexible about your payment frequency and method
Many insurance companies offer discounts to customers who pay their annual premiums as a lump sum instead of splitting it up into multiple payments throughout the year. In addition, some carriers will offset installment fees if you pay electronically or consent to automatic payments.
9. Review your coverage annually
As your business expands, your insurance needs will most likely change. Adopting a proactive approach can be a life saver for your business. Industry experts recommend making it a priority each year to re-assess what you currently have and adjust accordingly.
It doesn’t hurt to shop around for new coverage or even a new carrier while you’re at it since the industry changes rapidly.