5 Ways small and medium businesses can reduce insurance costs

Learn simple ways you can cut insurance costs and help your business grow.

Small and medium business insurance| Pixabay

We recently published an article on captive insurance and how small businesses can save money by forming an insurance company that covers similar uninsured or under-insured risks.

In this article we want to touch on various other ways that can be applied to achieve this goal.

In order to determine this, we have to look at the major insurance covers that most businesses need. Depending on the industry and type, businesses will have a combination of some covers mentioned below.

What type of insurance do you need for a small business?

• Property insurance.
  Property insurance covers equipment, buildings, and inventory in case of theft, fire or wind storms among others. They can either be peril specific or open peril.
  The former applies to specifics that are named on the policy. An example would be theft. The later also known as all risk offers protection against a wider range of risks.
• Workers compensation insurance.
  Workers compensation is required by most if not all states. It typically covers illnesses and injuries that occur on site. Employees who are injured get their medical costs and lost wages covered.
• Product liability.
  Businesses that manufacture and produce goods would find this type of cover very helpful. In the event of a law suit that claims your products cause damages or harm, product liability insurance would protect your business.
• Professional liability.
  Also known as errors and omissions insurance is particularly important for service based companies. It protects your business against negligence claims that may result from mistakes such as exclusions.
• Vehicle insurance.
  If your business has vehicles that help in the day to day operations, it is important to insure the vehicles against third party claims. A good third party insurance and comprehensive cover will together protect your business if the vehicle causes third party injury.
• General liability.
  As the name suggests, general liability protects your business from variety of claims. It covers personal injury, property damage, faulty products and medical expenses among others.

There are several factors that businesses should consider in order to lower insurance cost. However, lowering the costs must not in any case be prioritized over protecting your business.

You never know when a law suit will be the next customer knocking on your door. It is therefore important to only lower costs if they don’t compromise protection.

Insurance| Flickr| Creditpro

How can I reduce my business insurance premium?

1. Consider insurance packages.
   When you are starting out it’s advisable to always do some research before committing your business to a cover.
   Most insurance companies will offer you a business package that is tailored for startups. They may also offer discounts. Packages help small businesses save a lot and focus on growth.
2. Reduce risk levels.
   As a business owner you should take certain measures towards lowering your liability risks.
   If your business is located in an area that has a bad name it would be prudent to move. Insures prefer safer locations that are in nice places.
   Not only will a safe location drastically lower your costs, but also bring more customers to your business.
3. Outsource high risk tasks.
   One of the best ways to lower insurance costs for small and medium businesses is outsourcing risky tasks.
   Subcontracting delicate tasks to companies that have professionals dedicated to handling those particular task cuts costs.
   Risks are transferred to the company making your business very attractive to insurers therefore lowering your costs.
4. Review annually.
   Not everything in your business needs insurance. Maybe when you started your business you insured everything.
   After sometime you notice that you cannot sustain your premium. At this point it’s important to start looking at things that do not pose a high risk to your business and remove them from your policy.
5. Paying premium upfront.
   Before starting your business inquire about your insurance premium plans. To some, paying monthly may seem like a good strategy but it is costly. Your business incurs a lot of fees that would otherwise have been avoided if you pay annually or upfront.
   If your business is running and you have been paying monthly, talk to your company about adjusting your payments.

More from Bizinfuse:

Understanding how captive insurance works