One of the biggest overhead expenses for many companies is commercial insurance premiums. Without commercial insurance, a company is certainly at risk. One unfortunate event could wipe out a company's assets and force that business to declare bankruptcy.
Thankfully, there are ways to both have the protection of commercial insurance and save at the same time. Below are five ways your company can save on commercial business insurance premiums.
1. Light Claim History
One way to obtain smaller commercial insurance premiums is to have a very minor history of loss covered by insurance with your company. For example, if your previous insurance coverage was never actually utilized, you can certainly use that to bargain for much lower premiums.
Some claims, however, should also not be a big deal. In fact, most insurance providers are willing to overlook one big claim in a company's past. Several smaller claims, on the other hand, might be looked down upon. With this in mind, it might be wise to only take out claims on rather significant losses and simply absorb the smaller ones.
2. Good Credit History
It is true that insurance companies do not have the ability to use credit scores to judge business risk in the same way they do for determining whether or not an individual person should be given lower premiums. However, a company's credit history is still a big factor in determining what kind of premiums a company will pay. The insurance company will try to do a thorough job of researching both the company and the owners' credit history.
With this in mind, you should certainly try to maintain good credit with your company if you ever wish to pay low premiums for commercial insurance. Most insurance companies won't even offer commercial coverage to a business that has previously gone through bankruptcy.
Another way certain businesses get lower premiums with their commercial insurance is by simply having a long track record. For example, a company that has been in business for 100 years will most certainly receive lower premiums than a company that has only existed for seven months.
Overall, insurance companies like lenders don't like investing in something that isn't a sure bet. Fortunately, you don't have to have been in business for 100 years to get a break due to experience. If you and some of your business partners do have significant experience and success in your industry apart from the new company, it can also work to your advantage.
4. Good Location
Having a good location for you company's operations can also result in lower premiums for commercial insurance. This is actually quite logical. For example, you may own a retail store and need to purchase commercial insurance coverage to protect against the risk of theft. If your store is in an area with a high crime rate, it would be foolish for the insurance company to give you low premiums.
There may also be other factors in regards to location. Sometimes companies build factories in more remote areas because the real estate prices are low. However, it may also take the fire department a long time to reach that location. Even if there is a local fire department, they may only have one or two fire trucks. This can be a serious problem if your factory is huge. Consider these issues while still in the planning stage.
5. No Coverage Gaps
Lastly, another thing that is looked down upon and can negatively affect commercial insurance premiums is previous coverage gaps. If your company canceled previous insurance coverage and went on for a significant amount of time without it as a cost saving measure, this could affect your ability to obtain affordable coverage in the future.
Overall, commercial insurance is important. It protects companies against events that could wipe out profits and assets. However, you should also try to take steps to make sure your company can obtain coverage it can afford.