(by Andres Rojas)
Buying insurance for small businesses is hard for beginners. Between the legalese and the overwhelming amount of options, it’s hard to find small business insurance that meets your needs.
However, if your business is to succeed without leaving yourself open for a disaster, you can’t afford to gamble with your coverage. You need the best insurance for small business your money can buy without breaking the bank.
So, just to make sure your premiums don’t eat your profits, we made a simple guide to help you save on business insurance for your small business.
But before we delve into the matter, let’s start with a basic definition.
What is a small business?
Defining what makes a small business is trickier than it seems.
When most people hear ‘small business,’ they usually think about the mom-and-pop store in their neighborhood or even people freelancing from the comfort of their homes. Yet, unlike freelancers, small employers have employees, offices, and yearly revenues that can round or exceed $1 million by a mile.
Most organizations define businesses based on the size of their workforce or yearly earnings. That’s why the Small Business Administration (SBA) agency’s 500 employees’ cap is a popular definition.
However, this number varies widely by industry and location, going as low as 100 employees in some industries to as many as 1,500 employees in others. So if you’re unsure whether your company can apply for small business insurance, make sure you check your industry’s size standard in the SBA’s sizing table.
How to save money on your small business insurance
Understand your needs
Both over-insuring and under-insuring are serious issues for small business owners. However, while the first’s premiums will eat a steady chunk of your profits each month, the second one is a ticking time bomb that can explode at any minute.
To find what policy you should buy, check which are your state’s and industry’s requirements. For example, if your company sells services, having professional liability insurance will protect you from an unsatisfied client’s claim. Likewise, if your company owns a fleet of vehicles, buying commercial auto insurance is a must.
Comparing multiple quotes will help you gain a good grasp of the market and judge if an underwriter’s assessment is fair or if he’s blowing your risks out of proportion. So make sure you read each policy carefully, and find a small insurance broker that can help you understand them if anything sounds too technical for you.
Make your workplace accident-proof
Installing safety features in your business will reduce workplace accidents as well as workers’ compensation claims — therefore making your small business more attractive to carriers.
Some security upgrades that are worth investing in include:
Handrails for stairs
While these upgrades will cost you in the short run, they will help keep your premiums low throughout the years.
Pick higher deductibles
Premiums and deductibles have an inverse relationship. In other words, if you want to pay lower premiums all you have to do is raise your deductibles.
Buying insurance that has higher deductibles means you’ll have to pay a bigger amount of out-of-pocket money before your policy kicks in. However, if you have taken every step to make your business safe, this is a calculated risk that can save you a substantial amount of money every month.
Bundle insurance plans to get the best prices
In a nutshell, bundling involves buying small business insurance at wholesale rather than retail prices.
Basically, insurance carriers know that it’s impossible to make a profit if they give the best prices on everything. So instead of dropping their rates, carriers prefer to allow their clients to pick at least three commercial policies and combine them into a single Business Owner’s Policy (BOP).
That’s how, for example, if you bought a BOP that included professional liability insurance, general liability insurance, and workers’ compensation, you would pay a much lower premium than if you bought each of them separately.
Classify your workers correctly
Most states require that you have workers’ compensation insurance in case one of your employees gets injured at work.
Each type of worker is identified by a numeric code that dictates his insurance rate. However, the categories are very confusing – in some cases, even interns are considered workers. And this means that you can easily end up paying extra coverage you don’t need if you use the wrong codes.
So do your research or, better yet, get the help of an experienced insurance broker to help you get the coverage you need and not a dime more.
Hire an experienced insurance broker you can trust
In the end, buying insurance is just one more task that you as a small employer need to take care of. And while doing it yourself might save you a couple of hundred dollars, the odds of you making the right choice are stacked against you.
The insurance market is just too complicated and filled with traps for a newcomer to navigate it safely on his own. So rather than taking matters into your own hands and gambling with your company’s financial future, why not make the safe bet by hiring a first-class insurance broker?
With more than a decade of experience delivering customized attention to our clients, we at Zupnick & Associates have the experience you need to save thousands of dollars in premiums.
So contact us today, and let us find you the best coverage while you focus on taking your small business to new heights!