Why is insurance so expensive? You’re not alone if you are thinking this – especially now when so many business owners are trying to keep their companies open. So, if you are reconsidering whether you need insurance or not, then stop! This is all too common but will leave your business at risk.
Yes, It Is Possible to Reduce Your Insurance Rate
Here’s a quick recap for those who are trying to put the extra expense out of their minds. An insurance premium, in the simplest of terms, is the cost of your insurance. The premium is how much the insurance company is going to collect from you to provide insurance cover for your business.
This amount is calculated using a base figure, but you will be eligible for discounts based on your location, the services you offer, personal information, and other factors.
Read on to discover how to obtain the best insurance premium on your insurance. But first, a warning!
The Cheapest Insurance May Not Be Good Enough
Many business owners are tempted to take the cheapest insurance they can find. However, if you make your choice on price alone, you could be in for a nasty surprise when it comes time to pay a claim. You could be underinsured, which means that your claim could be voided, leaving you with no coverage.
How Are Insurance Premiums Calculated?
There are several factors that will affect your insurance premium. Here are 6 of them:
1.Type of business and the level of risk it presents. For example, the risk associated with a roofing contractor far outweighs the risks faced by a house cleaning service.
2.Value of your equipment.
3.The building you work from — where is it; what material is it constructed from; building age and size.
4.Deductible is the amount you will pay in the case of loss. The higher the deductible, the lower your premium.
5.Likelihood to claim.
6.Your insurance score. Have you heard of this? Over 90% of people do not qualify for low insurance premiums as they have low insurance scores. But why? Maybe you are part of the 10% who do qualify for reduced premiums. Let’s find out what it is all about.
Let’s look closely at this factor and how it influences how much your insurance costs. Two words: credit report. Your credit history and scores are used to determine your insurance premiums. The formula used to calculate this varies, but the main factors involved are your length of credit history, payment history, available credit, loans, monthly account balance, and outstanding debt.
Are You Likely to Claim?
You will have noticed that we listed the likelihood to file a claim as one of the factors. Your insurance company tries to predict how often you will file an insurance claim. This could depend on the nature of your work and the service you offer, and also on your credit card score.
You may be wondering, “How does my credit card score affect my likelihood of filing a claim?”
Insurance companies have found that people with poor credit are more likely to file claims. Without the funds to fix errors and make repairs to their business premises, they’re more likely to turn towards their insurance and file a claim.
The Secret to Getting the Best Insurance Premium
But there is something that not every business owner knows: your premium also depends on your insurance company.
Here’s a 3-point checklist of the characteristics of an insurance company that will get you the best rate for the coverage your business needs.
1. Reviews: an insurance company with a good reputation has gone out of its way to look after the interests of its clients, and this includes finding the best prices.
2. Carriers: an insurance company that represents many large carriers has access to the best deals in the country
3. Time in business: an insurance company that has been in business for many years has experience and wisdom. They won’t sell you insurance coverage that you don’t need.
This is How You Find the Best Premium on Your Business Insurance
It is simple: consult an insurance expert. Firstly, you won’t be paying extra for coverage you don’t need. Secondly, they know where to look for the best rates in the business. And thirdly, they will review your workers’ compensation experience modification worksheet to make sure you are getting the discount you deserve.