By Gregory Boop. Business Insurance Expert
Lowering your business insurance premiums is a continual process. Taking one business day to review your premiums can result in savings. This review can be conducted annually or whenever there is a change to the business significant enough to warrant a review.
Time Required: This is a constant process - set aside a business day annually to review your premiums.
Start your review by looking at your insurance file. If you don't have a file, now, is a good time to start one. Make sure that you have copies of all policies in your file and readily accessible when needed. Make sure there are copies of claims forms for each policy in the file. You will want to create a separate off-site location for a copy of your policies and forms in case this file is destroyed.
Organization is the first step in reducing insurance premiums.
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- Compare Your Schedules to Autos and Equipment Actually Owned
A good place to start with your premium review is an analysis of your equipment and auto schedules. Does your business still own the vehicles listed? I know of a business that insured a crane for ten years after it was sold. Maybe your line retooled and key equipment was changed and this can result in premium savings.
Much like Step #2, this step involves reviewing named drivers and/or key employees identified on policies to make sure these people are still with your company. Many employers simply fail to adjust their named insured endorsements when employees leave. But, this can result in significant savings if the loss of the employee results in lower risk.
- Look for Irrelevant or Repetitive Coverage
Business changes and it may change dramatically. Some coverage may no longer be necessary. For example, if a portion of your business closes, operations change, or you choose to out source, then it may be that your business carries coverage that can be eliminated.
A consistent safety plan will include the elimination of hazards that can become claims. Make it a goal of your business to enforce a safety plan and follow through. I suggest developing a tracking mechanism for the safety plan because otherwise it is impossible to gauge the effect of safety on insurance premiums. A simple method is the
"safe day" method. Every shift marks a calendar tracking "safe days", that is, days without injury to a worker or patron.
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- Classify Your Workforce Correctly
Significant savings can be achieved by making sure your workforce is correctly classified by your workers' compensation insurer and liability insurer. Your premiums are based on the type of workers used. If you are a painting company that incidentally uses ladders, then you could be incorrectly classified as a construction business and your premiums will be greatly inflated. If you have a large sales force and those sales people are being classified as line workers, then your premiums will be much higher. Classify each worker and make sure your insurer does so also.
Too many businesses don't take the step of telling their insurer that they want a better rate. Frequently, insurers will discuss the premium in detail and will suggest ways to have it reduced or the insurer or insurance professional will learn something about the business they did not know that may result in lower premiums. It never hurts to ask.
Most trade organizations or associations have affiliate members that are insurance companies. As a benefit of membership, your business may receive substantial insurance discounts. Membership in such organizations is very reasonable and can lead to increased business through networking.
Health premiums and workers' compensation premiums will be your highest - work to lower the costs through a healthy work force. Commit to setting a good example: quit smoking, become active and see your physician regularly. Adopt a no smoking policy at your company. Allow yoga or weight loss classes to be held at your break room. Encourage proper lifting techniques. Consider a partial reimbursement of health club membership as a benefit. In other words, taking active steps to create a healthy work place lowers premium dollars.
Train your workforce and demand training as part of their employment. Most Insurers will offer substantial discounts for a trained workforce. For example, liquor liability premiums can be cut by 15-20% if servers are required to attend alcohol awareness training. Find out what training will reduce rates and get your employees involved.
What You Need:
- Copies of All Policies, Schedules and Dec. Pages
- Your Telephone or Computer