Successful entrepreneurs and seasoned business professionals are always searching for new ways to cut down on the costs of doing business. If a company can't find a way to do more with less, it's unlikely to endure for long in a competitive marketplace where it's surrounded by savvy competitors. Far too often, business leaders fail to pay attention to one key area where they can seriously save money – their insurance costs.
Smart consumers regularly shop around for the best insurance options and search for ways to mitigate their rates. Why should your business be any different? Taking a little time to do the research and look for ways your company can reduce its insurance costs will save you money in the long run. Here's how companies can cut their insurance costs without cutting corners.
1. Know your options before you commit.
The best way any company can cut their insurance costs is by being aware of their options before they make a hefty financial commitment to one particular provider. Failure to do so could land your business in a commitment with a provider that is not cutting you a good deal, and getting out of an insurance plan early is often tricky.
If you're uncomfortable with your current business insurance policies, there's no need to stick around with a provider that generates lackluster results in an important area of commerce. After all, shoddy insurance isn't just something that will drain your accounts every month. In certain circumstances, it could cost you the entire business. Inadequate coverage is one of the leading reasons small businesses fail when calamity strikes.
Many small businesses make foolish mistakes that end up costing them huge sums of money in the long term while their corporate competitors invest more wisely in insurance. Rather than investing in fleet insurance and providing company vehicles, for instance, some small businesses simply reimburse their employees on expenses for driving personal vehicles for work purposes. While this may be easier for many small companies, it's a policy that could cost them a lot of money over the years when they could be saving money by operating a well-covered company fleet.
In general, familiarizing yourself with the differences between fleet and commercial insurance is one of the simplest yet most effective steps that any entrepreneur can take to mitigate their insurance costs. Business owners who don't know what they're doing when they purchase wide-ranging insurance policies for the entire company will end up wasting valuable capital. Don't let your business to suffer for your own ignorance.
Companies that get a head start on securing excellent insurance coverage now will be particularly fruitful in a few years, as forthcoming changes to the realm of transportation will radically reshape how insurance policies are administered. [Looking for business liability insurance? Check out our best picks and reviews.]
2. Review your needs and trim the fat.
As important as it is to look at your insurance options and what your business needs when choosing the right insurance coverage, it's equally important to take stock on an annual basis. As your industry and business grow, so will your insurance needs. What worked two years ago may no longer be the most feasible option.
If a company has expanded its trucking fleet 15% over the last year, moved into a new region or branched out into another service offering, it's very possible that it needs modifications to its insurance. Plan ahead and reach out to your current provider to inform them of how your business has changed.
Take an inventory of your property and assets to determine how much it would cost to replace those assets. You may find that you simply don't need as much coverage as your current plan offers or, on the other hand, that you need a little extra.
Smart business owners will annually review the state of their company's insurance needs and look into coverage from different insurance companies. Your current provider doesn't want to lose your business and will likely work with you to match a competitor's quote.
3. Reduce the risks.
As technology has advanced, it's streamlined the cost of many business operations, but it's also brought new threats into play that didn't factor in as recently as a decade ago. One crucial way that companies can reduce their insurance costs is by reducing the risks associated with their specific line of business. Procedural training, security, and safety review should all come together in an effort to improve how a business functions on a day-to-day basis.
Company leaders should keep up with new research, trends, and procedures in their field and develop plans on how to best implement them. Keeping employees up to date with proper training can often result in lower insurance costs, as it demonstrates to the insurer that your business is taking measurable steps to reduce its risks.
Aside from implementing employee safety training programs, either developed by your company or through an outside provider, you should take steps to tighten up your company's security. Companies that handle large amounts of client data and those that may use autonomous vehicles or drones in the future are particularly big targets for cyberthreats. You should have robust security procedures in place and train your employees on how to reduce exposure to cybercrime.
Whereas this might not have been a major threat even 10 years ago, it's very much a reality for every business. Failure to address these threats head-on could cost millions in insurance claims and potentially sink a business for good.
4. Protect your assets.
Companies that are investing in autonomous vehicles, drone technology or similar automating tech that enables them to remove humans from workplace scenarios should understand that this doesn't mean they can leave insurance behind.
Many taxi and trucking companies are eagerly planning around the continued development of autonomous vehicles because they think it will reap huge savings where workers' compensation and employee health insurance is concerned. In reality, however, as driverless cars become more of a reality, they'll need insurance in their own right to avoid liability issues that could jeopardize the company's assets.
Insurance providers in the future won't want to do business with a company that refuses to properly cover and protect all of its assets. Businesses that employ drones or autonomous vehicles to meet the needs of their customers, while simultaneously cutting down on their operational costs, could find themselves in the crosshairs of liability claims when this tech inevitably fails.
Much in the same way that good insurance providers help everyday drivers find affordable coverage, insurance providers of the future will find it necessary to help businesses insure their autonomous fleets and keep the cost of covering their drones affordable.
Cutting down on your insurance costs means understanding that forthcoming technological changes won't necessarily make insurance bills a thing of the past. In fact, those companies eagerly embracing automation because it will rid them of costly human workers and the insurance they demand should seriously rethink their approach to the future.
Keeping your insurance bill low means avoiding situations where your business can be found liable for wrongdoing, and the widespread reliance on technology we're witnessing could end up putting at risk just as many businesses as it helps.