Seen as an added cost rather than a long-term investment, most entrepreneurs ditch insurance thinking that it is not an integral part of their business. But regardless of industry, chosen market, and tenure in the trade, obtaining the right insurance protects your business from unforeseen events and unwanted liabilities.
If you think that getting insurance is right on complicated and expensive, you’re getting the wrong message. Depending on the insurance agent, provider, and nature of your business, policies can go as low as $30 up to several hundred. Though, keep in mind that cheap doesn’t always equate to shady policies. You just need to know what to find, where, and how to get cheap small business insurance.
Since every trade is different, there’s no general insurance pricing applicable to all businesses. But, there are things you can do to lower insurance cost without sacrificing the safety of your company.
How business insurance costs are calculated and factors that affect the plan
When it comes to insurance premiums, they are determined following a specific formula that applies to your business. Depending on the type of policy and risks involved, rates are then calculated to establish prices. If you’re wondering how risk factors affect insurance premiums, each risk has an associated cost and insurance companies review this based on historical trends as well as analytic models.
As a small business owner, it is important to know the risk factors that affect insurance costs and have a better understanding of how things work, and what you are paying. The majority of these risks include the following but is not limited to:
- The classification of your business if it’s a corporation, sole proprietorship, etc.
- The goods and services you deliver including a number of employees.
- The properties your business owns like buildings, vehicles, equipment, supplies, and their value.
- The daily operations of your company including administrative and technical aspects.
- The location of your business, total expenses, salary, and sales report.
- The actual risks involved in your trade like heavy lifting, tornado chasing, machinery, etc.
Comparing business insurance quotes
It is imperative to find an affordable policy that will suit your budget together with the needs and wants of your business. Your goal is to compare quotes from different agents and companies to land a better offer. However, do note that you only want insurance quotes from knowledgeable agents and reliable providers. The last thing you want from any insurance plan are loopholes within your package, inadequate coverage, limited protection, and difficulty filing claims due to complicated procedures.
When comparing business insurance quotes, you need to obtain at least three to five assessments from various providers. Moreover, don’t settle with verbal discussions but have everything in writing. Ask for a written quotation including the coverage details, limitations, and final cost for easy comparison. Remember that beyond pricing plans, you need to examine closely the value and benefits you’ll get out of the policy.
The next trick on how to get cheap small business insurance is to take advantage of bundled plans. Just like how discounts are being offered in department stores, insurance companies run their own promotions to attract potential clients. Instead of buying one policy from different providers, integrating multiple insurance plans from a single carrier enables you to get lowered rates and higher discounts.
Take the Business Owner Policy (BOP) for example. Being one of the most requested insurance bundles by small business owners, BOP combines Commercial Property and General Liability insurance in one convenient policy. You can also inquire about the commercial package which is a tailored insurance plan that extends your coverage for certain risks and liabilities.
When combining multiple insurances in one single package, double check your policies and make sure that everything works together. If you think that there are coverage gaps within each policy, ask for commercial umbrella insurance to add an extra layer of financial security.
Knowing business insurance coverage
There’s more to learn about small business insurance than pricing and packages. Beyond anything else, you need to know what’s included and what’s not within your policy. Each company, big or small, has its own unique needs and industry-specific requirements. You cannot compare the insurance of barbershops to restaurant businesses. Although some are generally required by most states, such as Workers Compensation, your insurance coverage differs depending on the business.
If you want to protect business properties like building and its content against unforeseen events, you’ll need Business Property insurance. For protection against bodily injury and property damage, while driving on the road, a Commercial Auto policy will cover the liabilities. And if your company deals with giving professional advice, having Professional Liability insurance will save you from costly defense expenses as well as legal settlements.
Regardless of insurance type, always remember that your policy should provide dependable liability coverage. It should be easily accessible, detailed, consistent, and reliable in times of concern.
Managing risks to reduce claims and lower premiums
The last tip on how to get cheap small business insurance is to manage risks to reduce claims and lower premiums. The greater the risks you have in your business, the higher the chances of paying pricey premiums. For example, if your business deals with using power tools and big machinery, your worker’s compensation might cost more than those running a clothing retail shop.
There are several ways to manage risks to obtain cheaper Business Liability insurance. First is to secure your workplace from dangerous tools, harmful chemicals, and perils that could harm people. Another is to conduct a training program for employees to help minimize, if not totally eliminate, business risks. You could also set up a safety management system and business continuity plan in case of major incidents. Other steps to minimize risks include the following but are not limited to:
- Improve security measures on both physical and virtual properties.
- Establish crisis management in the event of natural calamities.
- Annually check all tools and equipment to maintain best possible condition.