As most business owners already know, commercial insurance rates are rising dramatically. Commercial property insurance and employment practices liability insurance premiums grew by 9% in the third quarter of 2021. Global insurance premium growth is set to grow by 3.3% this year and an additional 3.1% next year. So let’s look at the pressing question of how to keep business insurance costs low as inflation rises.
How to Keep Business Insurance Costs Low as Inflation Rises
Inflation, one of the main culprits behind the rate hikes, doesn’t appear to be as transitory as once thought. This can put a huge strain on business owners who are already battling to overcome challenges such as supply chain shortages and labor shortages. Thankfully, there are ways business owners can lower business insurance costs in order to keep business expenses manageable during these trying times.
Shop Around for the Best Deal
Any savvy business owner will have shopped around for the best insurance policy when opening the business. However, that doesn’t mean the current policy will continue to be the best deal or even the best fit for the business. If premium rates are rising or the insurer is no longer willing to cover certain situations or events, it’s wise to look around for a new policy.
Those unfamiliar with the insurance industry may want to work with an insurance broker to find a new policy. Insurance brokers are experts in their field who can assess a company policy and find the most affordable coverage options to meet the company’s needs. Naturally, it costs money to hire a broker, but the long-term savings can make this option well-worth the expense.
Lower the Risk
Insurance coverage costs vary depending on a range of factors, and one of those factors is risk estimate. If, for instance, a business uses dangerous machinery, liability coverage can be high because there is a high likelihood that an employee could be injured on the job. A business in a neighborhood with a high crime rate will be costlier to insure than a business in an area with a low crime rate.
There are many ways in which a business owner can lower the business’ risk and thus save money on insurance costs. Moving to an online-only set-up can be a viable option. Also, it can help a business owner save thousands of dollars a year. Safety programs and driver training programs can also lower insurance costs. Installing a security system, smoke alarm, and fire sprinkler system can also keep insurance costs low. At the same time, they protect the business premises and employees.
Many business owners pay a monthly insurance fee without realizing they can lower the cost by paying upfront. Paying for a full year of insurance in advance is ideal. But even paying three or six months in advance can help business owners lock in good discounts. After all, inflation remains set to keep rising for the foreseeable future. So paying in advance has never been a better option than it is right now.
As insurance costs rise, it can be tempting to increase the insurance policy deductible in order to keep rates low. This can work well for some companies. But it’s usually not a good idea. After all, a natural disaster, employee error, or some other unforeseen event could permanently shut down a business that does not have sufficient coverage. Rather, business owners struggling to keep up with rising insurance rates may want to consider the pointers outlined above. They can be applied to a range of industries and have the potential to lower insurance rates both now and long term.
As a leading Los Angeles real estate company, Grand Mutual Insurance is here to do our part in keeping rate low and reasonable.