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10 Tips to Help Control your Insurance Costs

Posted in Professional Development

Author: Ken Sherman

The current insurance market cycle is a result of insurers under-pricing some risks they've taken on in the past at insufficient rates. But insureds are not without strategies that will give them more stability and, over time, lower insurance costs than their peer group.   
How many of these techniques do you currently use to keep your insurance costs as low as possible?

1) Comparison Shop

Many small business owners are so busy operating their business and satisfying their clients, that they don't always allocate enough time to comparison shop their insurance. This is extremely important, as your company and clients are continually changing, and your financial risk may change.

2) Minimize Employee Risk

One of the biggest drivers of higher premiums is claims. Make sure you hire employees without a criminal background to reduce your potential risks. Remember that claims can be made by clients, customers, employees, or others. It is important to do everything you can to operate a "safety first" business and hire the best possible people. 
3) Train Your Workers

Workers need training to ensure they perform their jobs properly. Well-trained workers are less likely to sustain on-the-job injuries or injure someone else. As a reward, your insurer may reduce your premium for performing certain types of training. For example, you may earn a discount on your commercial auto premium in exchange for a defensive driving program you provide to your employee drivers. Ask your insurer what types of training will reduce your insurance costs.

Hire drivers with clean driving records and institute a random drug testing policy. If your business requires motor vehicles, it is important to hire, train, and monitor your employees for compliance and institute a preventative maintenance program for your vehicles to ensure that they are adequately maintained. If your employees use their cars for business purposes, you will need to ensure that they're correctly insured and well maintained before they can use their vehicles for business.
4) Maintain a Detailed Inventory
By maintaining a detailed inventory of your supplies and equipment, you will be able to optimize your coverage. Frequently, small business owners estimate the value, but keeping an accurate inventory will enable you to have an optimal coverage level.
5) Improve Security and Safety Precautions
Security systems, fire sprinkler systems, worker safety programs, and driver training programs are a few measures that can reduce insurance costs. If you deal with sensitive customer data, it's crucial to maintain robust security protocols to reduce your exposure to cyber crime. Insurance carriers evaluate risk, and your agent or broker should be able to help you identify problem areas so that you can institute a program that works for your business.

Properly securing your valuable business assets is another way to reduce your commercial or business insurance premium. Please make sure you have proper fire safety equipment on-premise and test it annually. Having a monitored security system in your business, property, and adequate security on your commercial vehicles will reduce the risk of theft or damage.
6) Adopt and Maintain a Consistent Safety Plan
A safety plan can help you eliminate hazards that can lead to accidents, injuries, and lawsuits. However, a safety plan will be effective only if it is consistently enforced. Review your plan annually and evaluate its results. A good safety program can reduce losses and lower your workers' compensation and general liability premiums. If you need help establishing a safety plan, consult your insurer, many insurers offer risk control services to their policyholders.
7) Maintain good Personal and Business Credit 

If you are a new business, your insurance company will probably use your personal credit history when quoting you for business insurance. You will want to work on establishing credit in your business's name. Doing so will help lower your premiums, especially if your credit isn't the greatest.

8) Classify Your Workers Correctly

The rates charged for workers' compensation coverage vary widely from one classification to another. Thus, it is crucial to ensure your workers are classified correctly. Otherwise, you may pay more than you should for insurance. If your sales workers are misclassified as production workers, your premium could be unnecessarily high.

9) Look for Unneeded or Overlapping Coverage

Businesses change over time, and your policies may cover risks that no longer exist. An example is a building you sold several months ago that is still scheduled for your property policy. Some coverage may overlap or duplicate each other. You don't need to insure hired autos and non-owned autos under your general liability policy if your commercial auto policy covers those vehicles. Ask your agent for assistance if you need help identifying overlapping or duplicate coverage.

10) Ask About Premium Reduction Strategies

Ask your agent or broker for suggestions on how to obtain lower rates and premiums. (This is an obvious strategy that often gets overlooked!) They may offer options for reducing the cost of your insurance. Your agent may suggest increasing your deductibles, switching insurers, or even utilizing self-insurance. 

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