As an entrepreneur, you know that keeping your costs low is critical to your success. This is why you are constantly on the lookout for ways to reduce the expenses associated with running your business. One of the biggest initial expenses you are likely to face is the cost of insurance. Luckily, there are a number of ways to reduce the cost of your business insurance without compromising on coverage. In this blog post, we will outline 9 of them. So read on and start saving.
1) Get the right business insurance
To start things off, not having the right kind of coverage can be problematic in and of itself. In general, there are three types of business insurance:
· Liability Insurance - this is your protection against injury or loss suffered by others as a result of accidental damage to property or person caused by you or an employee acting on your behalf. This is a very common type of policy because most businesses will have a number of people coming in and out who could potentially bring liability claims against them.
· Property Insurance - this covers any physical structures you own including buildings, machinery and equipment from damage due to fire, theft or natural disasters such as earthquakes. It will also cover any loss of income suffered if your business has to close while you are repairing or rebuilding the damage.
· General Business Insurance - in addition to liability and property insurance, this type of policy could include coverage for losses due to interruption in your supply chain, non-performance by suppliers, equipment breakdown and data loss/damage.
2) Check your exclusions
When it comes time to renew your insurance policy, make sure that you read through all the details very carefully because each insurer is likely going to have slightly different wording on their exclusions list. For example, when wasthe last time you really checked whether earthquake or flood damage is covered under your property insurance? This sort of protection can usually be added to your policy with most insurers for a small additional premium, but it's easy to forget.
3) Pay attention to risk factors
In general, the greater the amount of exposure you have to potential claims from clients and customers, the more insurance you will need to protect yourself. For example, if a customer slips and falls on a wet floor in your store/café/restaurant then there is an increased chance you being sued and needing your premises liability coverage. Often times, injuries sustained at night or on weekends can result in higher settlement amounts due to judges perceiving these businesses as having more lax standards when it comes to safety. All this translates into higher premiums - so make sure that your business location is safe and well-lit to reduce your risk.
4) Know what you need to protect
Your business insurance policy should include all the property owned by our business - tangible (buildings, equipment) as well as intangible (copyrights, trademarks). However, always keep in mind that there are many things that your insurance policy is unlikely to cover. For instance, it probably won't be able to compensate you if someone sues you for infringement of their copyright because this is a legal matter between two parties. Your insurance company can provide additional coverage against lawsuits but they will likely charge more for this protection. Finally, make sure to take photos or video footage of anything expensive or important so you have proof of ownership in case your insurer ever has to verify the value of your property.
5) Know what you are covered against
Do you know exactly which perils are covered under your business insurance policy? And do you understand the difference between a named peril and an all-risk policy? A named peril policy covers damage due to events specifically called out in the contract while an all-risk policy covers any losses that fall into one of four categories: fire, lightning, windstorm or hail damage, and direct physical loss by collapse. For example, if a forklift collapses while you are transporting equipment, then this would be allowed under an all risk policy but it wouldn't be covered under a named peril policy because "collapse" isn't listed as a specific peril. By checking your exclusions list, you can also find out which perils are not covered under your policy at all.
6) Make sure your business location is safe
If you own a property that houses your business, then most likely everything inside it will be covered under one insurance policy. However, if your store/office/factory is located in an area with higher risk of claims (near the ocean or close to a toxic dump site for example), then this will certainly reflect on the cost of insurance premiums. Moreover, if you have anything valuable stored in your office building's basement - say expensive artwork for display at an upcoming expo - be prepared to pay more for this additional coverage because insurers usually require businesses in these areas to take precautions to protect their premises from floods and other perils.
7) Plan ahead
Your business insurance policy will have a renewal date - usually every year or every 3 years. In order to avoid paying more for coverage as your business grows, you should plan out how much money you will need in the next year so that you can renew at the right time. This means making sure any changes in your business operations are reflected in your financial projections so that you can estimate accurately whether or not you will be able to afford an increase in coverage. For example, if you have been seeing a very high demand for equipment rental services lately, then this would probably affect your property policy because it would mean buying more equipment.
8) Run a tight ship