Lower your insurance premium with these four steps

Business owners are always looking for ways to cut costs, so it's no surprise that they frequently ask me how to get a lower commercial insurance premium. Fortunately, the answer is pretty straightforward: Make yourself marketable to the carriers.

Keep in mind that your broker isn't the one controlling the price of your premium. Think of him or her as the middleman, simply relaying your information to the insurance carrier, who analyzes it and in turn provides the estimate.

Insurance carriers look for low-risk companies that are not likely to have a high number of claims. Therefore, the "safer" or less risky you appear, the more appealing your business is in their eyes – and the more likely they are to give you a lower rate. Think of it similarly to car insurance. Teenage males are known to incur higher rates because they often have spottier driving records, drive more often than females do and are less likely to wear their seatbelts. Once they prove they are safe and reliable, their rates often decrease significantly.

Here are four steps to lower your risks and ultimately make your business an ideal candidate for a lower insurance premium.

1. Make sure your workplace is safe.

Whether you have a current safety plan that needs to be updated or you are starting from scratch, a well-thought-out safety plan is key to increasing your chances of a low insurance premium. Your plan should clearly state your company's safety rules, procedures and standards of conduct. Be sure your plan is always up-to-date with the latest OSHA mandates and don't forget to include any company-specific procedures that align daily practices with safety guidelines.

2. Train your employees regularly.

A well-written safety plan is only the first step to mitigating workplace mishaps. Offering training programs for your employees is a solid way to reduce accidents due to human error. The broad scope of training programs you can offer range from harassment to disaster preparedness. Remember, the riskier (to insure) you appear, the higher your premium is likely to be. Implementing safety procedures and training programs shows carriers you are committed to reducing risks, which means you are less likely to incur claims.

3. Create an employee handbook – and update it.

An up-to-date employee handbook that documents your company's rules and procedures is crucial to any business. It shows you are organized and thorough, especially when it comes to mitigating claims. Review your handbook with each team member when they start the job – and continuously as you make updates. Be sure everyone has access to a copy for reference. To ensure it includes all necessary information, I suggest reviewing it with your lawyer or insurance agent at least once a year.

4. Be prepared.

Disaster can strike at any moment. No one knows that better than insurance carriers. Show them you're equipped to deal with any situation by creating a disaster preparedness plan. Often these plans highlight worst-case scenarios and provide instruction on how you will deal with and respond to the "what-ifs." Make sure your employees are aware of your company's disaster preparedness plan and test it with them regularly.

Actively preparing for and preventing risks gives your company an edge. Not only will you save money dealing with avoidable incidents and claims, insurance carriers will see you as a safer entity – because you are. And that gives you a better chance at scoring that low premium. That's dollars in the bank.

Parker Rains, a Chattanooga native, is vice president of middle market business insurance firm, Fisher Brown Bottrell Insurance, which is a wholly owned subsidiary of Trustmark National Bank.

Upcoming Events