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to Articles list Getting More for Your Business Insurance Dollar ByJudy A. Jacobs Getting the most for your business insurance dollar isn’t easy today. Without question, business owners and managers often leave money on the table when it comes to buying all types of insurance. Even though it’s a tough task wringing value out of every insurance dollar spent, there are ways to do it. At the beginning, it’s helpful to recognize what has been happening in the insurance industry. Like other segments of the economy, the insurance market has changed drastically over the past decade. While it’s not necessary to become an insurance “expert,” knowing what’s going on can make a significant difference when you get your insurance bill. Here are nine tips that can help you reduce your insurance expenses. 1. Ignorance of insurance isn’t bliss. “Oh, we let the XYZ Insurance Agency take care of all our insurance. We’ve been with them for years.” Maybe so, but you may be courting disaster. Your knowledge of your insurance coverages can be just as important as what your insurance agency is doing for you. It’s your business that’s being protected. If you don’t let even a trusted advisor such as an accountant make your business decisions for you, why would you let your insurance agent decide how to protect your business assets? Agents make recommendations, but you should expect your agent to bring you up to speed so that you have the knowledge to make informed insurance decisions. 2. And neither is ignorance of your business. In the same way, the agent needs to be thoroughly familiar with your operation. Each business is different. A client filed a plate glass claim with his insurance agent. “Sorry, John, there’s no coverage.” The agent and the client had been friends for nearly thirty years and the agent had never taken time to understand the client’s business. Expect your insurance agent to visit your business and ask questions. It’s the best way to make sure you’re properly protected. 3. The way you’re presented to the insurance company makes a difference. If you’re planning on selling a home, the astute real estate broker will make suggestions for “staging” the property so that it’s presented to prospective buyers in the best possible way. Insurance carriers should be courted, too, by presenting your company so that it makes a favorable impression. Insurance underwriters like to know and understand the companies they’re insuring. How your insurance agent makes that presentation can make a difference in the way coverages are rated––and that translates to the cost of insurance. Does your agent write a detailed letter to the insurance company explaining issues that might cause a problem? 4. An annual insurance analysis doesn’t need to be a waste of time. There are two types of annual risk assessments. One is essentially a sales call, a way to let you know that you’ll probably be paying more in the coming year. The other may involve a meeting with members of the insurance agency’s staff and include your account manager. The objective is to perform thorough risk analysis of the business. No business is the same year after year. This analysis will take some of your time, but it’s essential to your protection. 5. There’s one important way to reduce insurance costs. A primary reason for buying most insurance (other than what is mandated) is to transfer certain risks to an insurance company. If you failed to have proper coverage, you could very well be out of business should a catastrophe such as a fire or job bias lawsuit strike the company. In order to reduce insurance costs, a primary job of your insurance agent is to assist in developing a plan for your business to reduce risk. The purpose of a safety program or changes that you may be considering in your facility should be about reducing risk. Unfortunately, insurance is often used to mask a risk instead of dealing with this. That costs money. 6. Claims can leave a troublesome and costly trail. If you think that you have insurance for the purpose of covering claims, think again. Some insurance agents are uncomfortable confronting clients with a claims record that’s driving up premium costs or may result in non-renewal of their policy. There are two reasons why you should expect your agent to be actively involved with helping you reduce the number and type of claims: 1) it costs you money and 2) the insurance company penalizes the agent for having costly clients. 7. All insurance companies are not the same. Each one has particular preferences for writing certain types of business and avoiding others. Sometimes an insurance company will be actively looking for particular classes of new business and other times they may be either hesitant or refuse to touch them. What this means is that your insurance agent needs more than one, two or even three insurance companies that it works with. To meet your needs as precisely as possible, it needs to have a series of “markets” so that your account can be placed with the right carrier. Unfortunately, most agents represent fewer companies than in the past because carriers require a minimum amount of premium in order to maintain the relationship. To do this, business is directed to a certain company whether it fits or not. 8. Competitive quotes aren’t always competitive. More frequently these days, an insurance agent will offer to give you “a competitive quote.” What the agent asks for is a photocopy of what is called “the dec page,” the front page of the policy that has a list of coverages and the prices. With the “dec page” in hand, agents go to their companies to try to get a lower price. Unfortunately, the carrier is in the dark about your business. All that an underwriter sees are the coverages you have now—and that may be inaccurate or inadequate. It’s no way to go about protecting your business. 9. Communication as invoice. All too often, the major communication from an insurance agent is the invoice. There might be a birthday card, of course. You should be hearing from your agent regularly, whether it’s asking questions about your business or updating you on pertinent new issues that could impact your business. Insurance agents want you to regard them as trusted advisors. They want their expertise to be of value to their customers. But wanting is not enough. To earn this respect means that you should be able to count on them every step of the way, every day of the year so that you’re never caught off guard or find yourself in an unpleasant position. Judy Jacobs is sales manager for Mosinee Insurance Agency, Inc. 306 Water Street, Mosinee, WI. Her insurance career covers 20 years. She may be contacted at judyj@mosineeins.com or 715-693-2100. Back to Articles list |
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