Business insurance is a critical safeguard that every company must have in place, regardless of its size or industry. It provides a safety net against unexpected events, offering financial protection and peace of mind. However, business insurance costs have gone up significantly in recent years. The Wall Street Journal confirms inflation plays a role. The good news is the rates are stabilizing.
Nonetheless, business insurance costs add up. The cost of business insurance can vary based on factors such as the type of coverage, industry, location, and the level of risk associated with business operations.
Additionally, NerdWallet references the Federation of Small Businesses (FSB) survey that found more than half of the participants reported their business insurance costs went up by 11% or more. This is impacting some parts of their business to the point where they have to find a way to reduce spending in another part of the business. Unfortunately, some of them cut their business insurance coverage. This could come back to haunt them should they need to file a claim.
So, how can you help protect your company’s valuable resources? Let’s take a closer look at the world of business insurance and what you can do to help lower your business insurance costs – from understanding the basics of business insurance to implementing risk management techniques.
What Is Business Insurance?
Before diving into the strategies to cut business insurance costs, it’s important to start with the fundamentals. Sometimes, a business owner or leader may have done a trial by fire with insurance without understanding the basics.
Business insurance is a contractual agreement between a business owner and an insurance provider. It is designed to protect a business from various risks and liabilities that can arise during its operations.
Consider the example of car insurance. Everyone must have liability car insurance. If they get into an accident and it’s their fault, the liability car insurance covers the repairs for the other person’s vehicle. If it were not for car insurance, the person would have to pay out of pocket. It could potentially bankrupt them. Business insurance works similarly.
Business insurance typically includes several types of coverage. Here are examples.
- General liability insurance: This coverage protects a business from third-party claims related to bodily injury, property damage, or advertising injury. For example, if someone gets injured while on the business property, the business may be held liable for the injuries and any costs associated with it.
- Property insurance: It covers damage to your business property, including buildings, equipment, and inventory, caused by events like fire, theft, or natural disasters. It’s not your imagination. There have been more natural disasters in recent years doing more damage than in the past.
- Workers’ compensation insurance: This insurance provides medical benefits and wage replacement to employees who are injured while performing their job duties.
- Professional liability insurance: Also known as Errors and Omissions (E&O) insurance, it protects professionals and service providers from claims of negligence or mistakes in their work.
- Commercial auto insurance: If your business uses vehicles, this insurance covers accidents, injuries, and property damage involving company vehicles.
The first step to managing business insurance cost-effectively is to understand the specific insurance needs of the business. By tailoring the coverage to the business’s unique requirements, owners can avoid having too much or too little insurance, both of which can lead to wasted expenses.
6 Ways to Lower Business Insurance Costs
Now that you understand what business insurance entails, it’s time to explore practical strategies to reduce your business insurance costs while maintaining acceptable coverage. Here are the top six ways to lower your business insurance costs.
1. Implement robust and proactive security measures
Investing in security measures can greatly affect your insurance costs. Insurers often offer discounts to businesses that take proactive steps to cut the risk of theft, vandalism, and other security-related incidents. One powerful security measure that comes with multiple layers of security is installing video surveillance systems with remote monitoring capabilities.
Video surveillance with remote monitoring involves installing security cameras around the business premises, both inside and outside. It’s crucial to put cameras around the perimeter, not just at the entrance or the inside of the building. Business parking lots are at a high risk of theft and other crimes. Perimeter security is crucial because it means protecting the business within the boundaries, which includes the building, parking security, and anything else.
Remote video monitoring is a proactive security option that can help deter crime and provide evidence in case of an incident. Moreover, remote monitoring reassures you that there are always eyes on the business and its surroundings in real time when you’re not there.
When a business opts for monitoring done by both humans and technology, it can boost the chances of catching something before damage happens. Humans are trained monitoring operators who observe the cameras, analyze incidents, and can appropriately to the situation.
Can you imagine watching multiple monitors for hours on end every day? That’s why technology like video analytics is an important part of the monitoring process. It has the power to scan many, many video scenes in seconds looking for a match to any of its programmed scenarios. A scenario could be a human on a property after business hours. As soon as it identifies a possibility, it notifies the trained monitoring operator.
If the scenario turns out to be a problem, then the operator can take action. The action depends on the situation.
If there are intruders on the property, the operator can warn them through an onsite audio speaker. The monitoring operators aren’t on the property. They’re safely located in a remote monitoring center and can make decisions without worrying about their own lives. If the suspects don’t hear or ignore the warning, then the operator can call the police while tracking the invaders’ movements.
Video surveillance with remote monitoring shows a company’s commitment to security and reducing liability. As such, a company may qualify for discounted insurance premiums. Insurers consider security measures like this as a risk mitigation strategy that can decrease the likelihood of property-related claims.
2. Conduct regular security risk assessments
Performing regular security risk assessments helps identify potential hazards and vulnerabilities in a business. A comprehensive risk assessment done by a professional advises you on risk management strategies to implement. These strategies can reduce the chance of accidents and insurance claims.
During the security risk assessment, the professional will do the following.
- Identify and evaluate potential risks specific to the company’s industry. Construction would have different risks than automotive dealerships and multifamily residential properties.
- Assess workplace safety measures and protocols.
- Review employee training programs for safety and compliance.
- Inspect your property for hazards and maintenance issues.
Proactively addressing these areas can minimize risks, which in turn may lead to lower business insurance costs over time. Share these security risk assessments and the mitigation with the insurer. Request they do a re-evaluation of the business.
3. Bundle insurance policies
A business may require multiple insurance types. It’s possible to bundle multiple insurance coverages under a single insurance provider. Insurance companies often offer discounts for businesses that consolidate their insurance policies. This bundling can simplify insurance management and lead to cost savings.
4. Shop around for business insurance
It’s smart to do a regular evaluation of the business insurance policies. A business could be with an insurance company for years and not get the best deal anymore. It’s standard business practice for business leaders to shop around comparing prices, policies, and providers. Besides, business needs and coverage change.
5. Take steps to prevent insurance claims
Filing an insurance claim tends to cause insurance premiums to go up. Yes, it’s possible to prevent insurance claims and have a favorable loss history. This is when a business has few or no insurance claims. Having a strong loss history can reduce your insurance premiums.
A business can maintain a positive loss history by doing these things.
- Implement safety and security training programs for employees.
- Focus on accident prevention and safety measures.
- Create a culture of safety and responsibility within your organization.
By preventing accidents and minimizing claims, businesses can show insurers that they are at a lower risk. Thereby, the insurer rewards them with lower premiums.
6. Increase your deductibles
Explore the possibility of adjusting your insurance deductibles, which are the amounts a business pays out of pocket before insurance coverage kicks in. By opting for higher deductibles, you can lower your monthly or annual insurance premiums. The key part is to ensure that the business has the financial capacity to cover the higher deductible should it need to file a claim.
Business Insurance Costs in a Nutshell
Business insurance is a standard part of doing business. It protects companies when the unexpected happens that could put the company in dire financial straits. Lowering business insurance costs requires a proactive approach that involves understanding the company’s insurance needs, implementing risk management strategies that come out of risk assessments, and applying these six ways to find business insurance cost savings.
By taking steps such as investing in security measures like video surveillance with remote monitoring, conducting regular risk assessments, bundling insurance policies, shopping around, maintaining a strong loss history, and adjusting deductibles, a business can effectively manage its business insurance costs while protecting the business and its finances.
Every business is unique, so it’s essential to work with its insurance provider to tailor the insurance coverage and cost-saving strategies based on the company’s specific needs. By doing this, companies can strike the right balance between protection and affordability.
In searching for a remote video surveillance provider, ask the security vendors if they can help with the process of getting your business insurance costs lowered. When you work with a company like ECAM, you can have access to a team that has experience working with insurance companies. To learn more, contact us.
