How to keep the cost down for Business Insurance in 2021?

May 3, 2021 | Business Insurance

We are aware that Covid-19 has completely changed the way of life of millions of people, the economies in which citizens work, and how businesses operate. In a bid to stop its spread, many small and large companies have decided to shut down which created a huge impact on every sector of the global economy. Companies who have practical experience in cost reduction would precisely contend that every dollar they earn contributes a small percentage of their profit. But in any case, every dollar a company saves is important. 

Businesses are now thinking of approaches as to how to cut down on costs to maintain profitability and existence. Indeed, even without a global pandemic, reducing down expenses can increase the market shares of a company, improves its efficiency, and helps in establishing a competitive price for its products and services. 

Steps to keep the cost down

Some businesses still find a way to keep their businesses thriving despite the pandemic, but at one point these establishments may need to keep their expenses as low as possible to save their business. Here are a couple of ways to do cut down on costs:

  • Find a cheaper alternative for supplies

The company should reduce its supply expense by looking outside of its traditional suppliers and look for new vendors that offer lower prices and large discounts. 

  • Optimize production materials

the company should cut their production cost by selling out their scrap materials or by recycling them then selling them. They must learn how to optimize the use of their resources. 

  • Take a digital marketing leap

Companies should modernize their marketing efforts by looking at some cheaper alternatives in ways like increasing social media use and reducing traditional marketing, doing more in-house marketing, network more and advertise less, and stuff like that. Included also in the list is that companies should use efficient time strategies or optimize their productivity effectively by minimizing distractions and limiting access to time wasters. They should use apps exclusively for work purposes only to help employees focus and concentrate to stay on task.

  • Re-evaluate insurance policies to fit the need

Companies should lower their financial expenditures by reviewing their insurance policies and financial accounts. They must compare insurance providers for the most competitive rate and ask their provider if they can match that rate. Also, they must evaluate insurance policies to make sure they are not overinsured or duplicating coverage.

Other options to lower down costs for business insurance

Business insurance can give you financial protection if something turns out badly in your business activities. It covers everything from people to premises and that also includes public liability, employers’ liability, and professional indemnity insurance. It also covers when a business was sued for compensation, damage on their commercial premises, and more. While business insurance premiums are a necessity, there are ways a smart business owner can maximize the value of their money. 

Here are options to lower down business insurance costs:

  • The companies should raise their deductible

The math is simple: increase your deductible and lower your premiums. When you determine that it is necessary to file a claim, when you determine the cost that the business can pay, the algebra will appear. Larger companies can comfortably manage thousands of deductibles, while smaller companies can operate with tighter profit margins and require more limited expenses.  There are no hard and fast rules. Each company will have to independently assess its needs and come to a conclusion on how much deductible it can afford.

  • Companies should cut unnecessary coverage

Although most commercial insurance policies do not duplicate other types of insurance, they can overlap. Similarly, computer equipment can be insured by both commercial property and electronic data processing (EDP) policies. They can reduce insurance costs by checking for duplicate insurance policies and eliminating overlaps. Over time, business changes and their insurance policy can cover risks that no longer exist. 

  • Companies should look for package deals

This is another way to reduce the cost of business insurance– to buy a bundle of insurance policies instead of several separate insurance policies. An example of a package policy is a business owner’s policy, which includes general liability insurance and commercial property insurance. In addition to liability and property, much other commercial insurance can also be used as part of a policy package, including commercial auto, crime, and inland boating insurance. 

  • Companies should ask their insurance provider for discounts

For some industries, because of their team or organization alone, they can already reduce the cost of small business insurance. For example, grocery stores can receive organizational discounts in many cases. They may also be eligible for a security discount, especially after performing the previous step. If their business has recently added any new security or received any special training, they may ask for a security discount and get a new liability quote. Similarly, some vendors will offer discounts for them to recommend other businesses or relatives and friends. 

  • Companies should pay their insurance provider in advance

If they have been using a payment plan, they may have already paid for the privilege. They can lower the final cost by paying in advance. If this seems a bit overspending, then it is best to choose the current tax year and save the payment for the next year. If they feel burdened at the beginning, then they must always keep in mind that this is a good business practice, committed to protecting the business. If prepayment seems to be an impossible dream, it may cause trouble. Companies that are short of cash may suffer from poor cash flow. This is a matter to discuss with their accountant or CFO.

Business owners could also reduce their insurance premium costs by having a different approach or strategy in their management. Some of these strategies include:

  • Minimizing and managing risks

The greater the risk they face in the business, the greater the risk of paying expensive premiums. One could cite choosing between machinery and manpower when operating. Business owners may also invest in training their employees in the handling of machinery and hazardous materials. 

  • Implementing a security management system

By conducting regular equipment inspections, and improving security measures. In this way, the equipment and workers are less likely to have errors on the production because the operations are secured to have top-quality service or product which will help owners to reduce claims and premiums. This just shows how essential it is to manage business risks through regular training and plans.

  • Categorizing employees properly

In many industries, the incidence of work-related accidents is high. If their employees are accidentally classified into these categories, they may find themselves paying unnecessarily high premiums. A company must resist the temptation to underestimate the potential harm. 

  • Enforcing workplace safety

This is considered to be one of the most effective ways to lower down business insurance costs and premiums. Companies must create a strategic safety plan and make sure they stick to it. After making the plan, they need to provide a copy to each employee. In this way, they can put it into practice to the best of their ability. With proper preparation, a strong workplace safety plan will minimize accidents, reduce injuries, and improve inner peace. Of course, this will help companies avoid losses related to workers’ compensation claims and general liability insurance premiums. 

Always keep in mind that without adequate insurance coverage, the risk of facing hefty government fines and costly lawsuits is high. The set of policies a business usually needs are general liability insurance, professional liability insurance, property insurance, and workers compensation. If the business is included in the high-risk sector, this can make insurance costs even higher. If a business is a one-person show, then the liability and property insurance will do. However, businesses with employees are legally required to have Workers compensation, Unemployment insurance, and Disability insurance

Selecting the right business insurance provider that can offer you the best deal is the most crucial part. Remember, paying a higher deductible can make business insurance premiums affordable. However, if you know how to look and what to look for, you will continue to find affordable plans without having to pay high deductibles.

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