(This is a guest article by Bailey Harris*)
When you own a business, carrying the right amount of insurance is a must. Even if you're trying to watch expenses, you can't overlook or do without coverage. Not having insurance could mean that you are only one disaster away from a lawsuit, or worse, filing bankruptcy and closing your doors. If you are worried about the cost of insurance, you are much better off looking for ways to save than ignoring your need for insurance altogether.
Examine Your Needs
Take a good hard look at what type of insurance is really necessary for your business. Do you need property insurance? What about liability insurance or worker's compensation? When you've established your true needs, the next step is to determine how much coverage you need. It's possible you're carrying too much in one area and not enough in others. Do you really need that high payout on your burglary insurance? Perhaps it would be less expensive to install a better security system that could lower your insurance premium. Another possibility is to consider having some of your work performed by independent contractors. You wouldn't need to carry worker's comp. However, if you take this route, make sure the independent contractor carries their own insurance.
Liability insurance is usually a significant part overall insurance costs for any business. Finding ways to improve safety for your customers and your workers may allow you to carry less liability insurance. Consulting with a safety expert could also be beneficial in the long run. Your insurance agent could be of help as well. These professionals may be able to point out areas where safety features could be installed or help you hold safety seminars to instruct your employees in safer work habits. A safety expert may also help you find ways to make sure your customers are safer while on your property. The minimized threat of customer injury can translate into savings in insurance payments.
Get a Package Deal
Whenever possible, try to consolidate your insurance needs. Discuss options with your agent and determine whether carrying an insurance package would be to your benefit. Many insurance companies will reward multi-policy customers with additional discounts. For example, if you insure your property and your company vehicles with the same insurance provider, there is a very good chance that you will qualify for savings on both policies.
Look for Group Rates
If you belong to an organization that offers group rate insurance, it could be of value to your company. Many organizations have tremendous influence with insurance companies simply because they can bring customers in volume. As a result, the companies are prone to offer lower rates. If you don't actually belong to an organization that benefits from group insurance rates, do some homework and find out what groups in your area do enjoy that advantage. Consider joining the group, which will in turn allow you to take advantage of the savings. There will undoubtedly be some upfront cost, but it may be beneficial in the long run.
As with any type of insurance, the cost of business insurances can vary wildly from company to company. Before buying a policy, you should take time to get multiple quotes. As you are making comparisons, be sure to look at coverage levels as well as price. Although it is good to save money, the ultimate goal is to make sure that you have the proper coverage in the unlikely event of a catastrophe.
Ask for High Deductibles
As with most other types of insurance, policies for businesses include some sort of deductible. Paying out of pocket for a portion of the loss is standard. If your business is going well you may decide that taking a chance on a claim would be worth the extra expense of paying more of the cost yourself. Raising your deductible is a gamble, but the savings in insurance payments may be worth it. Examine your business finances to make sure you could withstand the outlay of cash. If so, consider raising your deductible to take advantage of monthly or annual savings.
Read the Fine Print
Businesses are frequently overcharged for insurance by accident. Be sure to review your insurance policies--particularly your worker's comp policy. Are your employees classified correctly? What about your inventory? Do you have replacement-cost coverage or an actual cash value policy? Know what you are paying for before your write out the check.
Remember That Business Needs Fluctuate
It's a standard business practice to do a cost analysis on a regular basis. As part of that analysis, you should include an update on insurance needs. If your profit to potential-insurance-payout ratio is out of sync, consider updating your insurance policy. You may be over insured. Spending money on insurance premiums comes out of your profit, and no business can survive by spending too much on unnecessary things.
*About the author: Bailey Harris writes about home insurance quotes and related topics for www.homeinsurance.org.
*Image Credit: Photograph by bookgrl [via Flickr Creative Commons]
(This is a guest article by Bailey Harris*)