How to save money on business insurance

Many business owners assume the only way to lower their insurance costs is simply to buy less coverage. But that’s not the only option. And in most cases, it’s not the best option. There are several ways to reduce your premium while still maintaining adequate protection.

That’s because insurers calculate premium costs based on things like risk profile, claims history, payroll, revenue, property values, and coverage selections. By shopping around, consolidating providers, analyzing your business practices, and being a bit flexible with your policies, you can save a lot on your commercial insurance.

Here are some ways to begin.

The best strategy for any purchase is to look at how other sellers are pricing the product. But buying insurance is a little different than buying a TV. Insurance pricing varies significantly between carriers because they each have different appetites for certain industries. For instance, a photographer, consultant, or contractor may be looking for similar coverage, but their premiums will probably be wildly different.

Of course, you can’t change what field you’re in. So, the goal is to find a carrier that views your business more favorably. Insureon makes it easy to compare insurance providers. One application will generate multiple quotes, so you can quickly and conveniently browse carriers.

There are advantages to one-stop shopping for business insurance. First, it’s more convenient to have all your policies in one place. But it usually means cost savings, too. Many times, providers offer multi-policy discounts.

Plus, if you have one point of contact for your insurance needs, they’ll understand your coverage better, and you won’t end up paying for duplicate protection or, on the other hand, having coverage gaps. You may even be offered more flexible payment plan options with multiple lines of coverage.

These are some of the most common bundling options:

A business owner’s policy, or BOP, bundles general liability and commercial property insurance together. It’s often less expensive than purchasing these two types of coverage separately. BOPs are ideal for businesses with physical assets, like equipment, inventory, or office space.

Another way to reduce your premium amount is to raise your deductible. While this may sound like an easy solution, it should be taken with caution. Businesses should only consider deductible amounts they can reasonably afford in the event of a claim.

For example, a marketing consulting firm with strong cash reserves may choose a higher deductible on professional liability insurance to reduce annual premiums. The focus shouldn’t just be on the premium cost alone. It needs to be a balance between monthly costs and potential out-of-pocket expenses.

It’s a good idea to regularly review deductible options during renewal periods. That will help you determine what you can afford—and what you can’t.

One way to make your insurance costs more manageable is to look at your own business policies and procedures. By tightening up some loose ends, you can make your company more attractive in the eyes of insurers and may improve underwriting outcomes. That type of risk assessment and risk management can include the following:

Put together, audit, and improve training and programs to avoid and minimize accidents and hazards. Employee safety, driver safety, equipment maintenance, and slip-and-fall prevention are good places to start.

Equip your business with physical loss control tools, such as security systems, fire alarms, and access credentials to sensitive areas.

For businesses that digitally store data, cybersecurity controls are just as important. Multi-factor authentication (MFA), employee phishing training, endpoint protection, regular data backups, and incident response plans are all steps you can take to better protect yourself from cybersecurity attacks, and insurers increasingly reward organizations that implement them.

Workers’ comp insurance coverage—and the resulting premium—are dependent on the information you provide to the insurer. To ensure you’re getting the right amount of coverage and paying a good price for it, it’s up to you to go through records and compare them with what’s on your policies. This can make a big impact on your insurance costs. Here’s how to handle the process:

Employee classification codes are the backbone of determining workers’ comp costs. The codes are grouped based on how risky each job is. The more dangerous the job, the higher the premium. Therefore, it’s vital that you get the codes right, because misclassification can lead to overpayment.

For example, an office administrator incorrectly labeled as a factory or field worker may increase workers’ compensation costs unnecessarily. Be aware, though, that all classifications should reflect the employees’ actual job duties. Intentional misclassifications carry penalties.

Another key factor that influences your workers’ comp premium is your total payroll. Higher wages generally mean higher potential claim payouts, and what you pay for your insurance will reflect that. So, it’s important not to overestimate your payroll, because that will increase your premium. Of course, underestimating can lead to larger audit bills later. Regularly reviewing your payroll will help keep premiums aligned with actual exposure.

With pay-as-you-go workers’ compensation plans, you have a lower upfront down payment, and your premiums for the rest of the year are calculated according to real-time actual payroll figures instead of estimates. That means you have improved cash flow and a lower likelihood of an audit.

Some insurers offer minimum premium workers’ compensation policies. This is the lowest premium an insurance company will sell a policy for, to cover its costs. But not every business qualifies for a minimum premium plan. It’s usually reserved for those who are self-employed, independent contractors, or sole proprietors with no employees that are in low-risk industries.

A ghost policy for workers’ comp is for the same group of people. However, it covers no one and provides no benefits. It simply offers proof of workers’ comp insurance to fulfill the terms of a contract or meet your state’s business insurance requirements.

For each of these policies, you need to be mindful of your state’s regulations. Not all carriers offer these policies.

Depending on your line of work, you may be able to lower your insurance costs through your professional network. Trade associations sometimes negotiate insurance deals, and industry groups may offer preferred pricing.

Even if there’s an upfront membership cost, the discount could justify the expense, and it may unlock additional resources beyond insurance. Professions like consultants, contractors, and healthcare workers often have associations that may offer insurance breaks.

An effort to make your insurance more affordable should also involve looking at what you’re currently insuring to see if your coverage still fits your situation. In some cases, you may realize that what you have on your policy no longer reflects the current state of your business.

Many insurance companies conduct an end-of-year premium audit, especially for coverage like cybersecurity, workers’ comp, or general liability policy. But often it’s a good idea to do a self-audit, too. This type of internal assessment helps determine if there’s any coverage you no longer need.

This can include sold equipment, closed locations, retired vehicles, and discontinued services. If you find any of those on your insurance policy, you should remove them. It’s smart to look for things like duplicate endorsements, multiple policies covering similar exposures, and outdated add-ons, too. This is also a good time to ensure any business personal property values are accurate and up to date.

Now that you know some of the principles behind how you can save on your business insurance, here’s a quick list of suggestions for specific insurance types that may help lower your bill.​

People often ask, “how much should business insurance coverage cost per month?” Unfortunately, there’s not a universal answer, because rates vary based on industry, location, payroll, insurer, and many other factors.

For instance, a videographer who shoots weddings on the weekends by himself may pay less than $100 per month. However, a contractor who does installation work and has employees, vehicles, and specialized tools may pay substantially more. When you’re pricing out business insurance, focus on the coverage value rather than the premium amount alone.

Finding the right insurance starts with finding the right partner. Insureon helps thousands of small businesses get matched with the best coverage for their situation at some of the cheapest rates.

Start by simply filling out an online form, and you’ll receive quotes from several leading insurance providers. You’ll be able to compare rates side-by-side and can contact our licensed insurance agents for help figuring out appropriate coverage levels and state regulations.

Once you're signed up, you’ll get immediate access to our portal, where you can access your account for policy documents and request a certificate of insurance (COI).