Tips to Lower General Liability/Business Owner/Commercial Auto Policy Premiums

Looking for methods to lower your insurance premiums?

An insurance company bases insurance premiums on the risks involved. To do this, they use actuarial data based on claim histories in order to evaluate classes of business for the possible losses that could be incurred. Remember, an insurance carrier only pays out on a claim when there is a covered loss, so it is the responsibility of actuaries and underwriters to accurately determine the potential not only for a claim, but for “worst case” scenarios and the potential for a drawn out litigation process. The insurance company determines its rates on the results. Obviously it goes without saying that the lower the risk, the lower the rate.

The steps you take today to lower your risks, not only help protect your business, but in some instances (such as having a central alarm system protecting your business property), these steps could make you eligible for lower insurance rates.

Business owners should consider the following steps to help mitigate the possibility of future claims:

  • Maintain adequate lighting throughout your business premises (inside and out).
  • Keep electrical wiring, stairways, carpeting, flooring, elevators and escalators in good repair. Inspect and maintain your grounds regularly.
  • Install a burglar alarm system, (many policies won’t cover you for theft without it).
  • Install a sprinkler system, smoke and fire alarms and adequate security devices.
  • Keep only a small amount of cash in the cash register.
  • Keep good records of inventory, accounts receivable and equipment purchases.
  • Consider keeping a second set of records off-site, such as with your accountant, bookkeeper or at home (today’s compact hard drives make this easy).
  • Make sure your employees have good driving records. To help you with your pre- employment screening, clients of Orr & Associates may order a DMV report on your prospective hire. We charge you only $5, (our cost).
  • You may also want to raise your deductible where appropriate to lower your premiums. Some carrier programs don’t offer this flexibility, but when offered, it could help. How high to raise the deductible should be governed by how much you can afford to pay out of pocket in the event of a claim. Be careful not to raise it so high that you cannot cover the deductible should a loss occur.

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