Business owners have an extremely large amount of bills they have to meet at the end of each month. Successful business owners are those that can find the most ways to limit what they pay for as many different types of costs as possible. Commercial insurance is one area where many business owners miss out on several different ways to save what they pay for premium. Here are five ways small business owners can save when purchasing commercial insurance.
Shop around your policy.
Periodically you should shop around your policy to ensure your carrier is competitive on premium. This does not mean you should switch any time another carrier can offer you a lower rate. If and when you have a claim it can be helpful to have a long established relationship with a carrier to prevent your premium from rising or being dropped from coverage altogether. If you are dropped from coverage and cannot find coverage on the open market you are forced to purchase workers compensation from the state provider which is much more expensive than the open market. In most states once you are in the state fund you must stay in the fund for three years before you are eligible to again purchase coverage on the open market. This is especially important if you are in a high risk industry.
Ask for flexible payment options
Most carriers offer some form of Pay as You Go Workers’ Compensation. This is especially beneficial for seasonal businesses or businesses that may be cash-strapped. The Pay as You Go Option allows businesses to pay premium each month based on the real-time payroll each month. Most businesses can get coverage in place for a few hundred dollars as opposed to having to come up with as much as thirty percent of the total premium just to get a policy in place.
See if your carrier offers credits and debits
There are many available ways to get a discount on premium. Some carriers offer credits for certain industries they have a stronger appetite for. Some states have credits depending upon several different aspects of your business. Mentioning this as a priority to your insurance agent early in the process is important to getting the best price. The reason you need to mention this to your agent is because your agent speaks with many different business owners on a daily basis. These business owners come from a very diverse range of industries and geographic areas. Not all business owners value price. Some businesses are small enough that they only pay $500 for yearly premium. To them it may not be worth their time to try to find a five percent discount. This type of credit may only save them twenty-five dollars. For some business owner’s it is more important to purchase a policy and get back to the day to day duties of running their business. If price is important to you than expressing that to your agent can help them meet your objectives.
Carriers are much more likely to offer deeper credits and discounts if they know they are going to sell multiple coverages to your business. Each carrier has their own specifically designed business owner’s package. Within the industry they are referred to as a BOP. Sometimes these packages may have a coverage you may not need. It is important to talk this over with your agent before cancelling any specific coverage. Agents have the unique experience of talking with business owners when they are purchasing coverage, but they also have the unfortunate opportunity to encounter business owners when something bad has happened. Because agents have dealt with these situations they may be privy to situations where your business does face a risk they you as a business owner do not realize the risk is there. That does not mean that you should purchase all of these coverages, but make sure their guidance is part of your decision process when deciding to protect your business.
Make sure you are classified properly
Making sure that your business is properly classified is extremely important. Especially when it comes to workers’ compensation insurance. Many industries have several different classification codes based upon the risk your business faces. Insurance agents and carriers are in the business of analyzing risk. Because they are in this business it is in their best interest to always assume more risk. If you rush through the purchasing process, they may assume your business faces more risk than it actually does. As a result, the business is charged more in premium. Taking a few extra moments during the purchasing process to let your agent know what your business does and what your business does not do is extremely important if you want to save on premium.
Walt Capell is the President/Owner of Workers Compensation Shop. Workers Compensation Shop is a rapidly growing national insurance agency with a strong reputation for forward-thinking, out-of-the-box products and solutions for business owners.