Insurance coverage is vital for business owners to protect against unforeseen financial losses. Yet the high cost of insurance premiums can burden small businesses struggling to maintain their financial stability.
In the UK, SMEs account for 99.9% of private companies and generate more than half of the overall turnover. However, almost half of these businesses do not have commercial insurance and are exposing themselves to potential financial risks.
If you’ve been putting off getting business insurance, now is the time to reconsider. Fortunately, there are ways to lower the cost without sacrificing coverage quality. Read on to discover four valuable tips to help reduce your business insurance expenses:
1. Shop around
If you’re just about to start a business, shopping around for insurance policies and companies is essential to ensure you get the coverage you need at a reasonable price. As a new business owner, you may wonder, ‘What insurance do I need to start a business?’ The answer varies depending on your business’ industry, size and specific risks.
Shopping around for insurance providers and comparing quotes can help you determine the types of coverage you need and which providers offer the best deals. Refrain from assuming that the first policy you come across is the best fit for your business.
Take time to research and compare options. Doing so arms you with enough information to come to the right choice and get the most out of your insurance coverage. Engaging a broker could also prove beneficial as they can assist in navigating the varied options and negotiating rates on your behalf, potentially saving you money.
While shopping around, remember that insurance costs vary depending on the type of business, the level of coverage and the industry’s risks. Consider deductible amounts, coverage limits and policy terms before deciding.
Due diligence helps you evaluate each policy’s cost-effectiveness and determine the best deal for your business. At the same time, you protect yourself from potential losses adequately.
2. Bundle your policies
Another option to reduce your business insurance costs is to bundle your policies. Insurance companies often offer discounts when you purchase multiple policies, such as combining general liability and property insurance.
Bundling policies saves you money and simplifies managing your insurance coverage. You can have a single point of contact for all your insurance needs, making it easier to make claims or modify your coverage as your business evolves.
Aside from property and general liability insurance, you may consider bundling commercial auto insurance, professional liability insurance and cybersecurity insurance. Cybersecurity insurance can help protect your business from data breaches, identity theft and financial loss.
Bundling your policies allows you to tailor your coverage to your specific needs and budget while enjoying cost savings and greater convenience.
3. Consider pay-as-you-go policies
A viable solution to lower insurance costs for businesses with fluctuating revenue or workforce is pay-as-you-go insurance policies. These policies offer the flexibility to purchase coverage only when your business needs it instead of paying for coverage year-round.
For instance, you can purchase workers’ compensation coverage for a short period during your busy season when your workforce is at its highest. As such, you avoid paying for coverage when your business is less active and save money.
Pay-as-you-go policies cater to a business’s specific needs, making them a cost-effective option. These policies also offer better cash flow management as you only pay for coverage when needed.
Additionally, you can easily adjust your coverage levels to match your business’s changing needs without incurring high costs. If your business is seasonal, pay-as-you-go policies can be a viable option to manage your insurance premium expenses while providing adequate coverage.
4. Review your coverage regularly
Regularly reviewing your business insurance coverage is crucial to ensure you’re not overpaying for unnecessary coverage or leaving gaps in your protection. As your business evolves, so do your insurance needs, making it vital to assess your coverage regularly.
For instance, if you’ve downsized your business, you may not require as much coverage as before. Reviewing your coverage can help you identify areas where you can cut back, ultimately saving you money.
In addition, reviewing your coverage regularly can help you identify any gaps in your coverage that need addressing. These gaps may arise due to changes in your operations or industry regulations, exposing your business to potential risks.
Staying up-to-date with your coverage and addressing any gaps promptly can help mitigate the risks associated with such exposures and ensure that your business is adequately protected.
While a Deloitte survey suggests that 80% of respondents anticipate spending the same or more on business insurance in the coming years, it’s important to note that there are various methods to reduce the cost of premiums. Don’t let this discourage you from obtaining the necessary coverage for your business.
By shopping around, bundling your policies, increasing your deductible, improving your risk management practices, reviewing your coverage regularly, considering pay-as-you-go policies, maintaining good credit and taking advantage of tax deductions, you can significantly reduce your insurance costs while still maintaining quality coverage. Remember to consult with insurance professionals to help you navigate the options and find the best deal for your business.