Have you ever wondered why insurance costs seem so high? You’re definitely not alone in this contemplation, especially during these challenging times when many business owners are struggling to keep their operations afloat. If you’re rethinking your need for insurance, hold on! This thought is common but can expose your business to significant risks.
Yes, You Can Lower Your Insurance Costs
Let’s break it down for those trying to push aside the burden of extra expenses. Simply put, an insurance premium is the amount you pay for your coverage. This figure represents what the insurance provider charges you to protect your business.
This amount is determined through a basic calculation, yet you might qualify for discounts based on factors like your geographical location, the nature of your services, personal information, and other variables.
Keep reading to learn how to secure the best premium for your insurance. But first, a word of caution!
Going for the Cheapest Insurance Might Be a Risky Move
Many entrepreneurs fall into the trap of opting for the cheapest insurance available. However, basing your decision solely on price could lead to unpleasant surprises when it’s time to file a claim. Being underinsured means your claim could be denied, leaving you without any safety net.
Factors Influencing Insurance Premiums
Several factors contribute to your insurance premium. Here are six key considerations:
1. Type of business and associated risks. For instance, a roofing contractor faces a higher risk than a home cleaning service.
2. Value of your equipment.
3. The characteristics of your workplace — including location, construction materials, age, and size.
4. Deductible amounts; higher deductibles typically result in lower premiums.
5. The likelihood of making claims.
6. Your insurance score. Did you know that over 90% of people struggle to qualify for lower premiums due to poor insurance scores? But don’t worry—perhaps you fall within the 10% that does qualify for discounts. Let’s explore this further.
We need to examine how this factor affects your premium costs more closely. The key phrase here is: credit report. Insurers use your credit history and scores as part of their premium assessment. Though the specific methods differ, core aspects considered include the length of your credit history, payment record, available credit, loans, monthly balances, and outstanding debt.
Are You Likely to File a Claim?
You may have noticed that the likelihood of filing a claim is listed as a pertinent factor. Your insurance provider predicts how frequently you will submit claims based on the nature of your business and the services you provide, as well as your credit rating.
You might be curious: “How does my credit score relate to my chances of making a claim?”
Insurers have discovered that individuals with lower credit scores tend to file claims more often. Without enough funds to rectify issues and maintain their business premises, they are more likely to rely on insurance for assistance.
The Key to Securing the Best Insurance Rate
One crucial aspect that not every business owner may realize is that your premium is also influenced by your choice of insurance provider.
Here’s a three-point checklist to identify the characteristics of an insurance company that can offer you the most competitive rates for the coverage your business needs:
1. Reputation: A respected insurance provider has a track record of prioritizing client interests, including finding the best possible rates.
2. Carriers: An insurer representing multiple major carriers has access to the top deals across the market.
3. Longevity: An insurance company with years of experience has the knowledge necessary to avoid selling you coverage you don’t require.
How to Discover the Best Premium for Your Business Insurance
The solution is straightforward: consult an insurance expert. First, you’ll avoid spending money on unnecessary coverage. Second, they have keen insights into where to find the best rates available. Finally, they will review your workers’ compensation experience modification worksheet to ensure you’re receiving the discounts you rightfully deserve.
