8 Ways To Save On Business Insurance

Reducing Your Public Liability Cost
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It doesn’t matter whether you’re a sole trader or a giant corporation, everyone in business is doing their best to reduce costs right now.

One area that can be relatively easy to make savings in is insurance, but it’s important to do so in correct way rather than putting your business at risk.

With this in mind, we’ve decided to put together a list of ways to save on your business insurance.

Advice Warning

Before we jump into the tips, we need to give a quick insurance advice warning.

Whilst we’ve done our best to put together a useful set of tips, they may not be appropriate for all business types.

Before acting upon any of these tips you should consult with your insurance broker or adviser.

Our Tips

Here are our top eight tips for saving on your business insurance.

Our first tip applies to business insurance in general, and in many cases it can also save you money.

Most business insurance packages will have up to a dozen different policy options, and the idea is that you (or your broker) choose the options which suit your business.

If for some reason you have chosen additional coverage options that your business doesn’t need, you could be paying more for your insurance for no good reason.

On the flip side you may find that there are policy options you should have, but don’t.

Changing these options may lead to higher costs initially, but could save you huge amounts in the event of a claim.

This tip really leads on from the first tip, but is more about checking the actual dollar values for each type of business insurance rather than the policy options.

Take a look at your levels of cover for each different type of cover and see if those levels are still appropriate.

For example you may have insured your equipment for $60,000 originally, but you have since sold a large piece of equipment and really only need $45,000 cover.

Another example could be a public liability insurance policy that was originally taken out for $20 million because of a certain contract, but you have since completed that contract and now only require $10 million cover.

We would never recommend reducing your cover for the sole purpose of saving money, but if you are paying for extra cover that you don’t require then it’s certainly worth reviewing.

The activities which your business undertakes will have one of the largest impacts on the premiums that you pay.

If your business activities have changed, then it’s worth reviewing your insurance to see if there are savings available.

A great example is that of an electrical contractor working on a mine site. Due to working on mine sites the cost of this person’s business insurance would be around triple that of an electrician who only did domestic work.

If that person had stopped working on mine sites but neglected to tell their insurance, they could be paying up to three times more for their business insurance than they need to be!

The size of your business will also have a major impact on the amount you pay for your business insurance, particularly when it comes to pubic liability and professional indemnity insurance.

Insurance companies measure the size of a business in two different ways, which include the revenue generated by the business and the number of employees.

If your revenue has reduced over the years, or you are employing fewer people, by letting your insurance company know you could make a decent saving on your insurance.

And here’s another quick tip. Some insurers only look at revenue whilst others only look at staff numbers.

If you have a high level of revenue but low staff numbers, then you want to find an insurer who bases the cost on staff numbers.

If on the other hand you have a high number of staff but low revenue, then you could save money by using an insurer who bases the insurance cost on your company revenue.

There is a common misconception that it’s cheaper to take out insurance directly from an insurance company rather than using a broker.

This is arguably true for some forms of cover such as home and car insurance, but it is often not the case for business insurance.

Home and car insurance is relatively straightforward and there are plenty of websites out there which will do the comparisons for you.

But business insurance doesn’t work that way. This is mainly due to the vastly more complex nature of business insurance, and it is this complexity that really brings a broker’s skills to the fore.

A good business insurance broker will be able to properly analyse your business and can use their knowledge and experience to put together the most appropriate package for your needs and budget.

In virtually all cases, business insurance will be more expensive when you choose to pay monthly.

This is because monthly payments for business insurance are generally structured through premium funding, which is a form of financing for insurance premiums.

As part of a premium funding contract you will be required to pay interest on the premium amount, which will generally be around 10 to 15% for the year.

Paying monthly is a great option for many businesses where cash-flow is an issue, but if you can pay annually it will certainly save you some money.

As with anything we purchase, whether it be for our business or for personal use, it’s always worth shopping around in order to save money.

Insurance for a business is no different, with each different insurance company having their own pricing structures in place.

By shopping around it can be possible to save hundreds, if not thousands on your insurance premiums.

But we cannot stress enough the important of comparing apples with apples.

Business insurance is fairly complex, and whilst on the surface two policies may seem quite similar, there may be important differences that only an insurance broker or adviser could pick up.

We recommend letting an insurance broker do the shopping around for you, as they will have access to a wide range of insurance products and can compare them quickly and accurately.

It’s also important to shop around for the right insurance broker for your needs.

Before you choose an insurance broker to go out getting quotes for you, talk to a number of different brokers and ask them about the fees they charge and the services they offer.

Our final tip is pretty simple. Just ask for a discount.

The insurance market is just as competitive as any other market, and you may find that by asking your insurance broker for a discount they will be able to help you out.

Whilst this discount may not be huge, the money is still better off staying in your business rather than being paid to an insurer.

If you are asking for a discount, it will generally help if you are taking out multiple policies through the same insurance company or via the same insurance broker.

Lower Costs Don’t Have to Mean Lower Protection

Saving money on your small business insurance doesn’t have to lead to lower levels of protection.

It is really all about making sure you have the appropriate cover. No more than you need, but certainly no less than you need.

By ensuring that you have the right types and levels of cover in place, and by shopping around and choosing the right insurance broker, it is certainly possible to make some great savings on your annual insurance bill.