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How to Find Affordable Small Business Insurance

Many small business owners are running a tight ship. They want to keep expenses low and income high, so they are on a near-constant hunt for ways to cut costs. 

Small business insurance is one expense that is necessary, but being informed can make a difference in how much you pay for insurance for your business. If you do not have appropriate insurance at the time of a loss, it is not likely that your business will survive.

Even though many business owners understand the importance of insurance, they still have to balance insurance costs with other business expenses and determine the priority of costs. That is why it is so important to educate yourself about insurance and to include your insurance agent early in your property search when you are looking for such answers as “How do you find cheap small business insurance?”

For affordable and appropriate coverage, follow these tips and steps.  

Top Factors That Contribute to the Cost of Small Business Insurance

Every business is different and has unique risks, which means that insurance premiums also differ from business to business. 

Some factors that determine the cost of small business insurance are:  

Policy type: There are many business insurance options out there, such as business owner’s policies, cyber insurance, commercial auto insurance, and professional liability insurance. Each policy has different coverages and premiums. Woligo offers the most popular small business insurance options, which you can view here

Business variables: 

How much you pay for commercial insurance is impacted by MANY different factors.

  • Do you have experience managing the type of business/property you are trying to insure? 
  • Do you employ people that are experienced?
  • What is your management style? 
  • Do you ignore problems until there is a crisis, or do you address problems as they arise?
  • What are your hiring practices? 
  • Do you do background checks, including motor vehicle reports, on prospective employees?
  • Are you careful about safety for your customers and clients within your business activities? 

Business location: Since some locations are more susceptible to weather damage, your location is taken into account to calculate your insurance premium. If you’re in an area where floods, wildfires, or tornadoes are common, placement of commercial property insurance may be difficult, with very limited markets available. The costs will certainly be much more than a property location that does not have these loss risks.   

Annual revenue: Higher revenue businesses are more at risk for threats such as cyber attacks. Plus, a higher annual income means that there is more to protect. Although insurance rates may be established at inception, the premiums can increase as the revenues and/or payrolls increase. 

Since most general liability and workers’ compensation policies are auditable at the end of the policy period, it is important to monitor your business revenues and payroll compared to your estimates at inception. You do NOT want a “surprise” additional premium at the end of the policy period due to an audit!

Number of claims made: If your business has a history of claims filed, it will almost certainly impact how much insurance premium you pay in the future. 

Classification of business: Your industry operations are taken into account when calculating the cost of business insurance. Rates and insurance costs are affected by these differing industries. For example, an office worker at a computer all day will have a much lower rate than a roofer who is climbing on roofs. 

Goods and services delivered: The types of services or products you provide may also influence the cost of insurance. If your product is ammunition, it will have a much higher rate than a manufacturer of soap, for instance. Insurance companies will consider these factors and present you with the business insurance cost based on the risk to the carrier.

How to Find the Most Affordable Small Business Insurance

Follow these four steps to lower your average business insurance cost. 

1. Bundle Your Policies

If you’re looking to reduce your business insurance cost, you should consider bundling multiple insurance policies together, where possible. Business owner’s policies (BOPs) combine general liability and commercial property insurance. These BOPs tend to be more economically priced than these same two insurance types purchased separately. 

Bundling policies can help discount the cost of business insurance, but is not available for all types of insurance. For instance, workers’ compensation is generally not available in a ‘bundle’. 

2. Raise Your Deductible

Another way to cut costs on your business insurance is to increase your deductible. But before you call your insurance company and ask to bump up your deductible, you’ll need to ask yourself what your company can reasonably afford, and you want to know what the savings in premium will be, if any.  

If your equipment or property were to experience significant damage, or if your business had to pay attorney fees, how much could your business realistically afford to contribute to the loss or deductible? Evaluate your business’ savings and see what deductible you can tolerate in the event of a loss.

3. Reduce Your Risks

Insurance is in place to protect you from risks. If you were to reduce your risks, your premiums may decrease. Plus, you’ll be less likely to experience costly claims that would ultimately increase premiums. 

You can manage your business’ risk by adopting the following: 

  • Workers’ safety training program and plan
  • Security systems to reduce theft
  • Fire sprinkler systems 
  • Driver training programs
  • Firewalls and security protocols for hardware and software
  • Safety plans
  • Risk management review
  • Disaster preparation measures
  • Human resources training 

4. Get Quotes from Multiple Insurance Companies

Just like when purchasing any high-ticket item, shopping around is one of the best ways to save money on business insurance. Although shopping may be a good idea, this does not necessarily mean that you have to have numerous agents involved. Many agents have access to numerous markets and/or can use software to obtain quotes from many different markets. 

Ideally, having three different quotes should be your goal. Do not make the mistake of looking at price only! To find the best small business insurance, review limits, deductibles, and coverages to have a complete evaluation and comparison before making your decision. 

To get a free business insurance quote from Woligo, contact us here.