If you’re running a small business, you know that insurance is a must-have to protect your livelihood and comply with state legal requirements. As a small business owner, you also know the importance of looking for ways to reduce your costs while improving the services you enjoy. So, we’ve compiled 20 small business insurance tips to help you get the most out of your commercial insurance coverage.
#1 – Know What Kind of Insurance You Need
There is no one-size-fits-all solution to small business insurance because every company has a unique set of risk factors and needs. What works for Company A might not work for Company B.
Whether you’re running an established company or starting a new business, at a minimum, you will need general liability insurance, professional liability insurance, and workers’ compensation insurance. These are just the basics and depending on your industry, risk factors, and the state you live in, you may have other types of small business insurance needs, such as a Business Owners Policy (BOP) or a Commercial Umbrella Insurance Policy. We recommend reading our article 12 Types of Commercial Insurance & Why You Need Them to understand what types of business insurance you may require.
#2 – Minding the Gaps
Let’s assume you have the basic insurance coverages to protect your business: general liability insurance, professional liability insurance, and workers’ compensation insurance.
It’s important to consider that these policies won’t cover every eventuality. For example, if your business is destroyed in a flood or a fire, your property insurance will cover rebuilding costs. That’s great, but how do you earn a living in the meantime? Business interruption insurance can cover salaries, expenses, taxes, and even loan payments until your business is up and running again. Commercial umbrella insurance can help cover insurance gaps as well.
#3 – Discounts
Bundling commercial business insurance policies can reduce the cost of your coverage. For example, a Business Owners Policy (BOP) can reduce costs by bundling general liability and commercial property insurance. You may also get a discount on other policies you add. Ask to speak with an agent near you to find out how to reduce your small business insurance costs today.
#4 – Ask the Experts
Co-Op Insurance agents are experts in providing superb coverage, and they know the ins and outs of the insurance industry. They can help you ascertain the known and hidden risks involved with your particular type of business to ensure you don’t overlook any critical aspects of insuring your business, as well as help you compare rates and coverages. Our agents can reduce your costs and help you minimize your exposure to risks.
#5 – You Get What You Pay For
It’s not always a good idea to take the cheapest insurance policy, sacrificing value and protection to meet your needs. Working with an agent who understands your business can ensure you get the right protection at the right price.
# 6 – Review Your Coverage Annually
Like an annual budget, you should review your commercial business insurance yearly to ensure that your coverages, risks, and liabilities haven’t changed and you’re still adequately covered. You may need to add or subtract certain coverages based on your evolving business. For example, paying a higher deductible might make sense if you need broader coverage and a lower premium.
# 7 – Protect Your Home-Based Business
Did you know your homeowners’ insurance policy doesn’t protect your home-based business? Say you work out of your garage and use it to store products. If your garage burns down, insurance won’t cover the damages. You need to purchase home-based small business insurance, which typically comes in the form of a rider policy to help you protect your business.
#8 – Protect the Products You Transport
Property insurance only covers your business’s products within 500 feet of your location. Inland Marine Insurance protects your products when shipped by truck, boat, or airplane.
#9 – Insure Company Vehicles
Commercial auto insurance doesn’t travel with your drivers; it travels with your insured vehicles. Therefore, you need the right coverage to protect your fleet because you can’t rely on employees’ auto insurance to protect your business. Also, if your employees use their personal vehicles for company business, it may be a good idea to add non-owned auto liability to your policy.
#10 – Find Savings in Commercial Auto Insurance Coverage
Two out of every ten commercial fleet vehicles are involved in an auto accident yearly, and the average claim ($70,000) is almost twice the cost of the average workplace injury. If you utilize strategies to keep your vehicle losses at a minimum, this will result in lower premiums in the long term. If you need ideas on how to do this, read this handy OSHA guide.
#11 – Are You Covered at Trade Shows & Events?
Trade-show liability insurance may be required if your business exhibits at trade shows and conferences throughout the year. Your trade-show booth is an extension of your business and should be treated as such regarding risk and liability.
#12 – Create a Business Plan
A good business plan may be necessary when setting your business up with insurance. It shows insurance underwriters that you’ve taken the time to assess your risk factors and demonstrates how you plan to protect your business. It can result in an easier application process and even lower premiums.
#13 – Do You Know Your Risks?
The insurance market is teeming with commercial insurance products for businesses of all shapes and sizes, but which types do you need? A risk assessment can help you determine what kind of small business insurance is right for your needs. For example, if you’re opening a restaurant, food spoilage could cost you thousands of dollars if you’re not properly protected. If you’re an online retailer, cyber liability insurance may be what you need. If you’ve assessed your risks, you’ll have an easier time securing the proper insurance coverage.
#14 – Maintain a Low Loss Ratio
When it comes to shopping for insurance or renewing a policy, insurance companies will review your loss ratio. This is simply the premiums you’ve paid divided by the cost of claims you’ve incurred. The lower the ratio, the more attractive your business is to insurance companies. A low loss ratio means that your company is a safer bet, and there’s less likelihood that the insurer will be faced with an expensive payout. You can use a low loss ratio to negotiate better prices.
Conversely, a high loss ratio will result in more expensive premiums, higher rates, reduced coverage, reduced limits, and may even lead to your insurer refusing to renew your policies.
#15 – Paying Your Broker
One trick to keeping your insurance costs down is to avoid paying your broker a commission based on a percentage of the premium and instead negotiate a flat fee. This can protect you from paying higher fees if your insurance rates rise.
#16 – Report Claims Quickly
The worst thing you can do when you have to file a claim is to wait because it can result in your claim getting denied. Notify your insurance company immediately whenever you have to file a claim.
#17 – Reduce Risk to Customers and Employees
Keeping your store, office, warehouse, or other place of business tidy can result in fewer workplace injuries. For example, crowded aisles, wet floors, crumbling walkways, and so on increase the chances of slips and falls at your business. Make warnings and instructions extremely obvious so you’ll be able to defend against a lawsuit if someone ignores or doesn’t see your signs.
#18 – Loss Prevention
If you operate a retail store, take loss prevention seriously. Make a list of your risks and then prioritize them so you know which types of loss prevention activities your money should be focused on. Doing so proves that you’re running a safe and healthy business, one that insurance companies want to bet on.
#19 – Formal Policies Protect You
Develop and follow written workplace policies. They can be invaluable when faced with a claim or if your business is party to a lawsuit.
#20 – Loyalty to Your Insurer
If you’ve been a long-term customer of your insurance company, chances are you’ll get better service, rates, and other benefits. But it still makes sense to shop around every 2-3 years to ensure you get competitive rates and coverage. If you decide to make a change, give your current insurance provider 90 days (or more) notice before your current policies expire so they have enough time to negotiate with you. You’ll be in a stronger negotiating position by being proactive rather than waiting until the last minute.
We hope you’ve enjoyed these 20 Small Business Insurance Tips to Improve Coverage and Lower Costs. Now, are you ready to save some money?
Read 10 Things You Need to Know About Small Business Insurance and scroll down to #8 – Ten Easy Ways to Reduce Your Insurance Premiums. You’ll be happy you did.
*Disclaimer: We offer content for informational purposes; Co-operative Insurance Companies may not provide all the products listed here. Please contact your local agent to find out more about how we can help with your insurance needs.