As the cost of property and casualty (P&C) insurance continues to rise, businesses must take an increasingly strategic approach to keep premium costs down. Our experts put together 6 commercial insurance best practices to help you manage your property and casualty insurance spend so you can get the coverage you need at a price that works for your organization.
1. Eliminate Duplicate Coverages
By identifying and eliminating overlaps in coverage, you can streamline your insurance portfolio and reduce costs. Your broker should annually review and adjust all your policies as needed to make sure your changing needs are continuously covered without duplication of coverage and overspending.
2. Classify Your Employees Properly
Carriers in each state have different workers’ compensation (WC) rates for each job depending on the risk level associated with each role. Due to this complexity, there is the risk that your workers could be misclassified. As a result, you could easily end up paying too much for WC premium if you don’t work with an experienced insurance broker. There are 2 key ways to save on WC premium:
- Communicate job roles clearly to your broker
- Streamline job descriptions i.e. if employees wear more than one “hat” you may be paying for the riskier classification
3. Raise Your Deductibles
Another effective strategy is to ask for higher deductibles when it makes sense. Auto, Property, Cyber, and Employment Practices Liability insurance (EPLI) are among the most common lines of coverage where you can evaluate whether to increase your deductible. However, it’s important to remember:
- Do not raise your deductible higher than the amount you can afford to pay in the event you need to submit a claim
- The deductible is a per-occurrence payment — not a one-time payment
4. Pay Premiums in Advance
Paying your insurance premium in full can often result in a discount, especially for small businesses. It’s a common practice with some lines like Malpractice insurance and can be a great way to shave off some costs. While the discount may only be 1-2%, this can add up to significant savings over time.
In addition, if you pay the premium in full, you can avoid processing fees typically charged for paying each installment. These fees can climb even higher if you end up missing a payment or making a late payment. Work with your broker to evaluate your options and determine the best payment plan for your needs and budget.
5. Ask for Discounts or Bundles
It never hurts to ask! These are some examples of risk management practices that can lead to cost-savings: alarm systems, sprinkler systems, or other safety measures designed to protect properties. Another way to save money is to combine or consolidate coverages. Consolidating your insurance policies with one carrier can lead to better rates and easier management of your coverage.
For example, business owners policies (BOP) are combined policies that include Property and Casualty (P&C) coverage, and carriers will often bundle them together. This can be especially beneficial for smaller businesses, such as accountants or electricians, for example, who can add their professional liability coverage to their BOP.
6. Shop for Different Carriers
Working with a broker like PSA is critical. Most importantly, it saves time and effort because you don’t have to vet many carriers to figure out their various strengths. Partnering with PSA gives you access to a wider selection of carriers than if you tried to do it yourself and were limited to a handful of direct writers. With a broker, you’ll have more options and access to more coverages so you can get the best carriers for your specific needs.
PSA understands which carriers offer the best terms for specific industries. We speak the language of insurance so you don’t have to.
