Independent contractors and small business owners know that the best way to improve cash flow is to bring more cash in, and pay less out. Sounds simple enough, but the costs of doing business can't always be negotiated down.
One way you can reduce your operating costs is by lowering the rates you pay on your contractor insurance.
Here's how to pay less, without giving up coverage.
#1. Review Your Current Coverage
The first place you can look to lower your insurance rates is on the policies that you already carry. If you have fewer employees, have sold equipment, or have retired vehicles from use, you may be able to find potential savings in your current policies.
Be on the look out for these changes:
- Employee roster
- Equipment bought or sold
- Vehicles no longer in use
- Type of construction work performed
Any changes in your business could mean a lower rate is available. Examine your existing policies, or talk to your broker to see where you can save money on your existing coverage.
#2. Calculate Before a Claim
Before you file a claim, take a quick moment to calculate and consider...
Can you afford a minor loss?
The number of insurance claims you file can impact the rate you pay. If you are considering filing a claim for a small incident, ask yourself if you can afford the loss.
If the answer is yes, you may save more money in the long run with lower contractor insurance premiums.
If your favorite hammer was stolen from the bed of your truck on the way to work, you can probably replace it without a claim.
If you were involved in an auto accident on your way to the jobsite, and you are facing vehicle damage, lost and damaged equipment and tools, and possible injuries to yourself, an employee, or a third-party...
Make the claim.
One way you can reduce your operating costs is by lowering the rates you pay on your contractor insurance.
Here's how to pay less, without giving up coverage.
#3. Increase Your Deductibles
If you decide that paying out of pocket for small losses is an affordable option to prevent premiums from increasing, the next logical step is to increase the deductibles on your policies.
Take the biggest deductible amount you can afford.
Usually, a higher deductible means a lower premium rate.
The amount you save in annual premiums may be more than enough to cover your higher deductible when you finally do need to file a claim for a big-ticket loss.
#4. Don't Let Coverage Lapse
Construction can sometimes be a seasonal profession, and it could be tempting to let certain coverages go in between projects, or during off-seasons.
If you want to save money, don't do that.
Letting coverage lapse can actually lead to increased rates. It can also put you at risk for not getting coverage in the future.
Many insurance companies offer premium discounts for no-lapse coverage.
Determine the best policies that you need for your contractor business, and keep your policies active. Stopping and starting policies won't save you money, and it can cost you even more in the long run.
#5. Combine Coverage
If increasing cash flow and protecting your profits is a priority, then there is a very good chance that you will use more than one contractor insurance policy to protect your business. And that gives you one golden opportunity to save some money with very little effort.
Combine your coverage.
Most insurance companies will offer a discount to you when you combine, or bundle, your coverage. Combine a general liability policy with an inland policy, for example, and you receive a discount on the premiums for both.
Talk to your broker about the ways you can bundle coverage on:
Saving money on your insurance rates gives you more cash flow for your business. And who doesn't want to see more cash?
Remember...
Combine your policies together, review them regularly to make sure they fit your current business needs, increase your deductibles, don't make claims for the small stuff, and be sure to maintain your coverage at all times.
Guest blog by Citizens General.
