As the New Year approaches, small-business owners return to their spreadsheets to look over their budgets and figure out what financial changes they'll make for the new fiscal year. You’ll likely ask yourself where you can save money and how you can shift priorities to make room in the budget for what’s really important.
Business insurance can be confusing, but the good news for small-business owners is that there are several simple ways (including bundling coverage for a discount, opting to pay premiums in installments, and implementing risk management procedures) to make insurance fit into your budget better.
Keep reading for our guide to negotiating lower payments on your business insurance.
4 Steps to Lower Insurance Premiums
If you’re like a lot of IT business owners, you’ll probably be surprised to know there is sometimes "wiggle room" in insurance prices. Working with a knowledgeable agent, you might be able to find ways to save on your insurance premiums in both the short and long terms.
Here are a few tweaks you can make to your policies to help them fit into your 2014 budget a little more easily.
- Switch to monthly payments. If a big annual lump sum payment is too much for your business, remember that you can often switch to a monthly payment schedule to alleviate cash flow crunches.
- Don't cancel your plan. One common mistake small-business owners make is cancelling their insurance plan when money is tight. That can actually end up costing you more. Insurance companies will often increase your premiums when you restart coverage. In addition, Errors and Omissions policies will stop covering your old contracts the second you cancel coverage. E & O insurance is a "claims-made" coverage and you need to have continuous coverage in order for it to pay for lawsuits from old clients. Canceling insurance increases your future premiums and exposes you to more liabilities.
- Adjust limits and deductibles. You might be able to lower premiums temporarily by lowering your limit (or raising your deductible). Usually, this is just a short-term fix, as you'll want larger limits / lower deductibles when your business grows and faces more liabilities.
- Ask your agent about risk management and lowering costs. Some insurance providers give discounts to businesses that have a data security response plan, worker safety training, or other programs that reduce the risk of a lawsuit. Ask your agent if you qualify for any of these cost savings.
(If you're planning on purchasing IT insurance for the first time, look at our sample insurance quotes to get an idea of the different policies you can purchase and their cost).
How Business Insurance Can Save You Money
As the year wraps up and you review your budget, remember that business insurance can actually save you money in the long run. That's the whole point of getting it. When you purchase an Errors and Omissions Insurance or a General Liability Insurance policy, you pay a little money now in order to be protected from an expensive lawsuit later.
A web developer's E&O policy could protect them from a million-dollar cyber liability lawsuit when their client's site is hacked. A IT project manager could save tens of thousands of dollars in legal fees when conflicts with a sub-contractor mean their project isn't delivered on time. A computer repair shop could be saved from having to file bankruptcy when their General Liability Insurance covers a lawsuit filed by a customer who fell in their lobby.
For more reading about cost-saving strategies, check out the following articles:
"4 Tips to Lower Your Tech Firm's Workers' Compensation Insurance."
"How to Get E&O For Less: Insurance Tips for Tech Businesses."