How to Effectively Lower Small Business Insurance Costs
As a small business owner, there’s little doubt that you try to save money wherever possible. If you aren’t frugal, it’s quite easy to get in over your head, eating your profits before you can even write yourself a paycheck. If your goal is to keep your costs to a minimum as you get your business off of the ground, your insurance policy is a great place to start. Here are five ways that you can lower your small business insurance costs:
1. Know What You Need
The first question that you should ask yourself is this: What kind of insurance does a small business need? If you don’t research the kind of coverage that you need, you run the risk of paying for more than what you need, effectively raising the cost of your policy. Most small businesses need property damage, personal injury liability, bodily injury and advertising liability coverages. If you think that you may need additional coverage, consult your financial representative for guidance.
2. Request Quotes
One of the best ways to reduce your insurance costs, no matter what type of policy you’re looking for, is to secure quotes from multiple companies. The key to securing accurate quotes is inputting the exact same information from one form to the next. Once your quotes are returned, you should look for reviews of the various companies. Remember that saving a buck won’t make up for a lack of customer service. It’s often a smarter move to pay a few extra dollars a month to insure your business with a reputable company.
3. Lower Your Claim Risk
When it comes to lowering the cost of your insurance policy, establishing an effective risk management policy is a must. Take a close look at your business and identify your risks. Do you have employees? If so, your risk of fraud, embezzlement and injury claims may be heightened; look for ways to lower these risks. The amount that you are charged for your premiums is directly related to the number of claims that you make. If you can lower your risk for filing claims, you’ll realize a lower insurance rate.
4. Review Your Policy Biannually
Don’t make the mistake of signing your insurance policy and not reviewing it. You should pull out your policy for review at least twice a year. Additionally, if your business’s circumstances change, reviewing your insurance policy is a good idea. Look for any coverages that you may no longer need or coverages that are missing. You should also know that you don’t have to stay with your current provider if you don’t think that you are being treated fairly or given the best price for your premiums. You can change providers at any time you wish during the course of your policy contract.
5. Raise Your Deductibles
The amount you pay for your small business insurance policy is directly related to the amount of your deductibles. The lower your deductibles are set, the higher amount the insurance company will have to pay for any claims that you make. By raising your deductibles, you can realize a significant yearly savings on your insurance policy. Contact your agent to discuss how high your deductibles should be set in order for your business to save money on its insurance costs.
If you’ve started a small business, it’s important that you save money where you can. It can take several years for your business to start turning a profit; saving money in the beginning means that you have to sink less of your own money into your venture. By minimizing the cost of your insurance policy, you can put more cash towards equipment and marketing; two things that will be very important to your growing company.
Carrie Johnson is an avid business blogger. You can follow her on Twitter @johnson121_.
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