As businesses grow and start generating more revenue, many business owners become obsessed with insuring as many aspects of their operations as possible, and rightly so. There are several types of insurance catering for business needs, and actually, some are simply required by law. Business insurance costs will greatly vary according to a number of factors, and therefore depend on the specific needs and situation of interested businesses. Here’s what you need to know about the price structure, and about how to keep the costs down without compromising on the extent of the coverage that you will need.
What are business insurance costs based on?
Business insurance costs are based on a number of key factors, such as the type of insurance needed, and the type of operations and the nature of businesses.
Types of business insurance
Business insurance costs will first depend on how many types of business insurance policies are subscribed. Common business insurance types include:
- business contents insurance or business equipment insurance,
- data breach coverage,
- property insurance,
- workers compensation,
- general liability insurance,
- directors and officers insurance,
- commercial auto insurance,
- business umbrella policies.
Many business insurance providers usually market these types of insurances as a single bundle, so unless business customers really want to have an à-la-carte approach, getting the bundle might be a better strategy to keep insurance costs down.
Business insurance costs and type of business operations
Business insurance costs vary according to the nature of operations and the nature of businesses:
- sole traders typically do not need to get workers compensation insurance, but may want to focus on key-person insurance;
- businesses transforming goods will especially watch product liability insurance policies;
- depending on the business nature, and what’s actually being done in the business offices or factories, business property insurance costs can vary a hundredfold or even a thousandfold;
- understandably, risk is one key basis to appreciate insurance costs, so if the company is routinely handling hazardous goods, or dealing with multiple contractors, prices will go up.
For example, sole traders may pay as little as £500 in general liability insurance, and service-oriented firms as much as £5,000 per year.
How to keep these costs down?
If the main drivers of business insurance costs have been identified, it’s quite easy to pinpoint what can help bring these costs down.
A deductible is how much a policyholder will still have to pay before the insurance contributes anything in the event of a claim. It may be a good strategy to increase these deductibles in order to keep monthly insurance premiums down - but careful financial planning is required.
Keeping in touch with the insurance agent
The more insurance agents know about your business and how business is going, the better the rate they will offer. It’s therefore very important to meet with the insurance agent frequently, in order to update him about the evolution of your operations and get matching rates.
There are many ways a business can reduce the exposure to risk, and therefore, business insurance costs. Installing alarms, enforcing risk-management policies in the offices and factories, increasing controls and keeping all documentation related to these endeavours is a great way to keep insurance costs as low as possible.