12 Ways to Reduce Small Business General Liability Costs

Posted by Matt Reilly on 09 March, 2018

Insurance is a system that only works if enough people buy, and pay for, coverage. Otherwise, the insurance companies would not have enough money in the bank to cover their customers’ claims. That would force them to raise prices, which would convince even more people not to buy coverage.

But just because you really should have insurance for your business doesn’t mean you have to pay the first price someone throws at you. There are more than a few ways to reduce your insurance costs.

Below are 12 ways to lower the price of your company’s General Liability insurance.

Before You Shop for General Liability

1. Downsize
If you’re in the process of choosing or building a new business location, then you have the opportunity to reduce your General Liability premiums. Choose the smallest space you can comfortably operate in, particularly in the areas where customers are expected to spend time or pass through. The larger your customer-serving location, the more risk the insurance company will see.

2. Update
Old plumbing, old wiring, old walls and ceilings… all of these things will increase your General Liability premiums. This is pretty intuitive: older structures are more dangerous for everyone, including the customers who could sue you if the building was a cause of some harm to them or their property. Moving into newer structures, or updating older ones before you move in, can reduce your risks and therefore your costs.

3. Choose a safe area
There are two things that define a “safe” area for an insurance company: crime, and foot traffic. Crime is obvious, if you have a problem with crime in the area, your risk goes way up. Foot traffic is more complicated. Most small business owners think, “I want as much foot traffic in my store as possible!” But the popularity of your specific store isn’t the issue. Foot traffic risk, for your insurance company, is about your odds of being sued. If your store sits on the Las Vegas strip, you’re more likely to see a “Slip and Fall” lawsuit than a store on an empty country road.

4. Hire experienced operators
Experienced business owners see lower General Liability rates than new ones, but that’s hardly something you can control in the present time frame. Instead, look to hire experienced managers and operators. Insurance companies know that if the people in charge are experienced, their guidance should allow you to operate in a safer way.

5. Get some safety plans on paper, and stick to them!
Having proof of a serious safety plan, in writing, as well as signs that you are implementing it in your place of work, counts for a lot to your insurance company. Training programs being continuously offered to employees, and taken by managers for certifications, can reduce your premiums in the same way.

While You Shop for General Liability

  1. Join a trade/professional association

Often, associations that serve businesses like yours can offer their members an insurance program at a special discounted rate. Joining such an association (or asking around at an association you are already a member of) could be well worth it if they have a well supported program.

  1. Look for a package deal

Many of the small businesses that need General Liability coverage will also require some amount of property coverage. For this reason, insurance companies began packaging these two policies together years ago. Typically, buying one packaged “Business Owner’s Policy” rather than two separate General Liability and Commercial Property policies saves you a good chunk of change.

  1. Or even better: a specialty package

While we’re on the topic of Business Owner’s Policies, many insurance companies can offer you a specialty version of this kind of packaged coverage, which contains only the protections that businesses in your industry really need.

  1. Shop around, or have someone shop around for you

It’s never a good idea to spend hundreds, if not thousands, of dollars without getting a second price estimate from a similar source. You should not make your choice of insurance without getting at least two quotes. That way if one company is overpriced, you can avoid the mistake of choosing them. The best way to do this is by using an expert insurance agency. They not only get you competitive pricing, but also save you time.

  1. Ask for a deductible, or choose the higher one

Almost no General Liability policies come with a deductible these days, but asking for one could lower your premium considerably. The more you are willing to pay upfront, the less you will need to pay in premium. Ask an insurance expert, and a financial planner, before you make this decision, however. If you choose a deductible that is too high, you could find yourself in a rough spot where your insurance won’t cover you, but you also don’t have enough cash on hand to pay the damages for which you are liable.

After You Shop for General Liability

  1. Don’t make frivolous claims

This one should be a no-brainer, but if you try to make a claim on your policy when it clearly would not apply (or when the costs you are claiming you need covered are very low), you could be labeled as a higher risk customer, and have your premiums increased the next time you buy a policy. Each claim you make is recorded, and affects a claims history that any insurance company will look at before giving you a real quote. Be sure that every claim in that history is a serious and reasonable one.

  1. Update... again
Each time you let go of an asset (property, piece of equipment, etc.) be sure to call your insurance agent or agency and have them remove it from your policy. Otherwise, you will continue to pay for coverage for something that you no longer have or use. Plenty of people only find out that they are still paying for extra coverage after a year or two when their premiums continue to grow for no discernible reason.

Topics: Coverage 101


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