5 Tips for Negotiating the Best Price for Your Small Business Insurance

On average, small businesses pay between $150 to $500 monthly for insurance. For some owners, the costs can feel like a heavy burden.

The good news is that maximizing coverage and minimizing costs are possible.

Keep in mind that small business owners can comparison shop to find the best rates. However, it’s difficult to negotiate them down.

For example, insurance providers rarely drop the rates on commercial auto policies. Instead, providers offer discounts for installing safety features and anti-theft mechanisms.

Understanding Insurance Rates

Although insurance companies provide clients with coverage, they can’t afford to pay out every claim, especially simultaneously.

The insurance industry has adopted sophisticated algorithms that help it accurately assess risk per client and situation.  Insurance professionals have mountains of data that let them pinpoint risky clients, industries, and situations.

Therefore, the riskiest ones pay the highest premiums since they are more likely to file claims.

All businesses face high liability risks. On commercial properties, customers might slip and fall. In the field, company cars might experience theft, and drivers might cause accidents.

Insurance providers consider the data and establish average rates and tiers. Then, they offer clients the rates.

The following are five tips for negotiating the best price for your small business insurance.

  1. Know Your Needs

Before agreeing to one insurance policy over another, small business owners must know their company’s needs.

It’s unnecessary to purchase policy features that the company will not need. Owners should practice vigilance, but it’s also possible to go overboard.

A company whose fleet consists of five vehicles should only purchase enough insurance to cover them, not more.

Insurance protects the small business owner and the company against severe financial losses that could result from the following:

  • Lawsuits
  • Personal injury
  • Vandalism
  • Theft
  • Business income interruption
  • Employee misconduct
  • Acts of God

Since policies renew annually, savvy business owners can sign up for a policy and its terms for one year. Then, reassess it before it renews and expires.

Owners might discover they don’t need extra coverage, especially if market or economic conditions change.

Small business owners carry several responsibilities on their shoulders, including obtaining health insurance for themselves and their employees.

Learn more about health insurance after leaving a job.

  1. Comparison Shop

After jotting down the company’s insurance needs, start comparison shopping.

Small business insurance is a niche market for providers, and many providers have specialties. Some can only operate in certain states, while others only insure companies in specific industries.

Therefore, make phone calls and speak with local representatives who can point you in the right direction and provide rate estimates.

Obtaining referrals from other business owners makes the comparison shopping process more manageable. You can also ask them about their policies and rates.

The goal is to find an insurance professional who understands your industry and business. Then, they can offer solutions that fit your company’s needs, size, and circumstances.

  1. Address Risks

Insurance rates depend on risk – the higher the risk, the higher the rate.

Owners can make their companies more insurable if they address the risks beforehand.

For example, installing anti-theft devices on company vehicles ensures that commercial auto policies stay near the average. Hiring drivers with clean driving records also keeps rates reasonable.

Provide safety training for workers in warehouse environments and install security camera systems in retail shops.

Retail establishments can also ensure that stores remain clean and free of items that could cause customers to trip.

  1. Ask for Discounts

Business owners who address their company’s risks and take actionable steps to mitigate them improve their organization’s rate negotiating position.

It also allows them to ask for discounts from insurance representatives.

Another way to shore up your negotiating position is to maintain a good credit history. It demonstrates the organization’s ability to pay its bills and solvency.

Insurance discounts usually kick in for non-business consumers. However, it doesn’t hurt to ask your representative. Then, you can discuss policy details that could spark great deals.

  1. Bundle Policies

Lastly, consider bundling policies. Even though insurance providers have rigid standards and risk assessments, they have devised alternatives to help potential clients.

The Business Owner’s Policy has become the most common small business bundle. It includes property and business liability policies.

Companies should carry both policies, and bundling them makes their price cheaper than purchasing each separately.

The right insurance representative can customize a bundle for your company, primarily if it benefits from newer or lesser-purchased policies.

Data breach insurance and errors and omissions haven’t become standard policies.  Therefore, some agents could bundle them in the future with other options.

Experience unparalleled growth and efficiency with Insurance Quantified. We specialize in supporting commercial P&C carriers and MGAs, maximizing underwriting capabilities to minimize loss ratios and achieve scalable success.

Conclusion

Small business owners must become adept at negotiating. After comparison shopping for small business insurance policies, work with an agent who understands your company’s needs. Then, balance obtaining discounts and lowering risks to obtain the best rates.

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