Business insurance plays a crucial role in protecting business owners and their valuable assets in unforeseen incidents. Unfortunately, with about $314.70 worth of net premiums written in 2020, commercial insurance seems to be an expensive affair. Nonetheless, having the right policy can help ensure business continuity even in the face of unanticipated interruptions.
As a business owner with business insurance, there are two essential questions that you need to ask.
- What factors can cause my premiums to increase?
- What measures can I take to reduce my premiums?
Why Does Business Insurance Premium Increase?
The rise in business insurance premiums can be credited to different factors such as:
- Past Claims History. Insurance companies use Comprehensive Loss Underwriting Exchange (CLUE) to analyze your past claims. If you have filed many claims, your premium will go up even if you weren’t at fault.
- Low Credit Score: Lenders use your credit score to determine your credit risk and capacity to repay a loan. The lower your credit score, the higher your insurance premium will be.
- Zip Code: Different locations pose different degrees of threat based on population, demographics, geography, and climate. The higher the risks in your area, the higher your premiums.
How Can You Reduce Your Business Insurance Premium?
The following tips can help you lower your insurance premiums.
- Buy Package Policy: Buy a package policy rather than several individual policies. For instance, instead of buying general liability and commercial property insurance separately, buy a business owner’s policy, which combines the two coverages.
- Increase Your Deductible: A higher deductible means you’ll pay more out-of-pocket before your coverage kicks in. But, conversely, the higher your deductible, the lower your premium will be.
- Shop Around: Compare quotes from different insurance companies, go through all the terms and conditions related to premiums and then choose one best-suited to your needs and budget.
- Reduce Your Risk: Your insurance provider will charge you extra for coverage if your firm is considered high-risk. Theft-prevention programs, disaster preparation measures, and additional human resource training are some of the ways to reduce risk inside your premises and lower your premiums.
- Cut Overlapping or Unnecessary Coverage: Examine the coverage provided by each policy carefully. Look for overlapping benefits with your existing insurance plans and remove any extra coverage you do not need.
- Pay in Advance: You may be eligible for a discount if you pay your premiums in advance, especially when you pay them quarterly or yearly. This might mean a large upfront payment, but the savings over the year will be significant.
These are some of the ways you can reduce your business insurance premium. To learn more about the types of coverage you require for your business, contact our experts at CAV Insurance Agency today. Our team of professionals will help you find a custom-tailored business insurance policy as per your needs. So contact us today to get started!