How to Save Money on General Liability Insurance

26
April 2017
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General liability insurance is a must-have for business owners. This essential commercial insurance policy offers financial protection against third-party property damage, injuries, or bodily harm. While getting general liability coverage is an excellent idea for businesses of all sizes, specialties, and industries, paying too much for coverage is never a good financial move.

Here are six ways to get lower rates without sacrificing the quality of your business coverage:

1. Review Your Current Coverage

Your general liability rates are based on a number of different factors, including your business size, industry, revenue, and claims history. If you’ve made any changes to the products or services you offer, reduced your labor force, or have gone another year without a claim, you may be able to save on your premiums. Whenever your business changes, your insurance needs and premium costs may change, too. Be sure to check in regularly with your insurance agent and find out if your current rates reflect what’s really going on with your business.

2. Pay Upfront Premiums

Insurance premiums can typically be paid in two ways: upfront or as monthly premium payments. What’s the benefit to paying an annual premium upfront? Most insurance providers will offer a discounted rate if you decide to pay off your premium all at once. If you have the cash reserves handy, your overall insurance costs may be lower if you can pay off your annual premium upfront and skip the monthly premium payment.

3. Increase Your Deductible Amounts

Want to save money on your general liability insurance? Increasing your deductibles is a tactic many business owners use in order to lower their premiums and increase their available cash flow.

There is one caveat to this money-saving tactic, however.

If you don’t have the resources available to cover the increased costs of your deductibles, your insurance policy isn’t protecting your business.

Before you increase your deductibles, be sure that your business can afford the higher deductible amounts in the event of a claim. If you have chosen a deductible that is completely unaffordable, your business is still at risk from the high costs of accidents, injuries, lawsuits, and unforeseen incidents that could devastate your business.

If you have enough funds set aside to cover a higher deductible amount, then increasing them can be an easy way to reduce your premium rates.

4. Don’t Let Your Coverage Lapse

Many businesses have off-season or slow times. If you are facing a period where your business will be bringing in less profit, don’t try to free up extra cash by letting insurance coverage lapse.

If you have a prior cancellation for non-payment on a policy, you may find yourself ineligible for future coverage. If you can get covered again, a history of dropping policies and picking them back up again can flag your business as high-risk, leading to higher premiums in the future.

Many insurance companies will offer a premium discount for no-lapse coverage for your business.

If you get in a tight spot and need to prioritize your business expenditures, don’t skip payments or temporarily drop insurance policies.

5. Skip Small Claims

Your past claims history is a major factor for determining your insurance premiums. Several small claims can signal a larger risk than if you had one large claim. The more risky your business appears, the higher your premium amounts will be.

Don’t sweat the small stuff. If you have a minor incident that your business can afford to pay out of pocket, it may be worth it to skip the claim process. Absorb the smaller losses and save your insurance for the big claims that your business doesn’t have the reserves to cover.

6. Combine Business Coverage

General liability is an important policy to protect your business, but it won’t cover every possible loss scenario you face. It won’t protect your business from the costs of auto accidents or damage to your own goods or property from theft, fire, burglary, or vandalism.

Most business owners need more than one policy to completely protect their financial interests and investments. That’s why most insurance companies will offer you a discount for combining (or bundling) multiple policies together. Whether it’s a BOP (Business Owner Policy) that combines property and general liability coverage into one streamlined policy, or if it’s combining commercial auto, general liability, property, and professional liability policies together, bundling is a great way to save.

To keep your general liability rates affordable, remember…

  • Keep your policies up to date
  • Pay premiums up-front
  • Don’t start-and-stop coverage
  • Avoid making small claims if you can afford to pay them
  • Increase your deductibles if you can afford the higher amounts
  • Combine multiple policies with the same provider to get the lowest rates

Business insurance is a necessary part of doing business. But you can get the best coverage and protection possible for your business without overpaying for it.

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