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16 Tips for Cutting Insurance Costs
June 1, 2007

(June 2007) Premiums for workers compensation and other business insurance is partially a function of claims, so taking steps to reduce liability will translate into lower insurance costs.

Insurance premiums are a heavy cost of doing business. To minimize them to the extent possible, keep your workplace safe and take other measures to avoid claims. The National Association of Insurance Commissioners (NAIC), through its new InsureU for Small Business has provided these tips for premiums savings and adequate protection.
Workers' compensation
This coverage is mandated in most cases, with premiums tied to the number of accidents or other occurrences.
1. If the business owns machinery, make sure workers who operate it are properly instructed on its use and are given protective gear--goggles, gloves and other recommended safety equipment to prevent accidents.
2. Keep office space in good physical condition--maintain carpeting and railing on stairs. Keep phone and computer wires out of the way so they don't create hazards.
3. Learn about safety requirements for your industry from the U.S. Department of Laborís Occupational Safety & Health Administration (OSHA) (click on "small business").
Personal and liability insurance
Most small businesses carry BOPs--business operator's policies--to protect against property losses and liability claims.
4. Have your property assessed periodically (at least every year) to maintain sufficient coverage.
5. Retain receipts for equipment, furniture, and other valuables in case they are damaged or destroyed and a claim must be made (digital photos are also very helpful).
6. For leased premises, don't rely on the landlord's coverage to protect your business property; usually only the building structure and common areas are under the landlord's policy. Read the lease carefully so you can carry insurance for separate property, including any structural improvements you've made.
7. Update liability coverage when sales increase or when adding employees to the payroll (the policy is fixed on business sales and payroll estimates prior to the policy's inception).
8. Create a written manual for safety practices and procedures so you can ask for a premiums reduction.
Commercial auto insurance
Decide whether the owner or the company should own the vehicle and then address coverage needs.
9. If employees operate company-owned vehicles, check their driving record (don't use anyone with a poor driving record) and make sure they're training properly on the operation of the vehicles.
10. Make sure you're covered--if you use a personal vehicle for business driving, check with the carrier to see if business-related liability is excluded. The business name may have to be included on a personal policy in order to be covered.
Group health insurance
While premiums may be high, there are strategies to minimize or reduce this cost.
11. Before buying any coverage, survey employees to find out what's important to them so the company doesn't buy unnecessary features.
12. Comparison shop for equivalent plans. Inquire about premium increases during the past five years to detect a pattern of rate hikes.
13. Contact your state insurance department to see if there are programs offering assistance to small business owners.
14. Explore trade associations as a way to obtain lower cost health coverage.
Home-based businesses
Don't assume you're protected under a homeowner's or renter's policy, which may limit or exclude coverage for business property or business-related liability.
15. Obtain a simple endorsement to an existing homeowner's or renter's policy to increase coverage for business equipment.
16. If an existing policy cannot be supplemented for business coverage, buy an in-home business policy.


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