Managing Your Business Property Insurance Costs

Business property insurance is a necessary expense but one you for which you can take steps to reduce or, at least, put yourself in a position to get the best value for the money you spend. Consider the following steps you can take to control business property insurance costs.

Get the Right Coverage

Controlling your business property insurance costs begins with making sure you are buying the right type and amount of coverage. The lowest premium cost on insurance is no bargain if it is coverage you don’t need.

At a minimum, your business needs replacement protection for damage to your structure and equipment. You need protection for specific causes of damage - such as flood - that are not in typical insurance policies but which may be a threat to your enterprise. You need liability protection for on-site injuries or injuries that occur as a result of the operation of your business off-site, such as a delivery vehicle.

Insurance coverage must be tailored to the specific needs of your business.

Terms are Negotiable

The cost of the right coverage for your business can vary with the terms of the business property insurance policy you have. As an example, if cash on hand is not a major issue for you, then a higher deductible amount might make sense. The deductible is the amount you must pay before your insurance company is required to pay anything. The higher the deductible, the lower the premium that can be offered. If cash flow is good but large, unexpected amounts of cash are difficult, it can make sense to have a lower deductible and higher premium.

Before a Policy is Issued

The insurance company will take numerous factors into account before offering you business property insurance and before determining the premium they will charge. Among those factors are the age, condition and location of your business property.

Before the insurance company representative comes to inspect your property, take steps to get the structure in the best condition you can. The look of your property matters as well as the structural condition.

By having a property that is less likely to need repair or likely to need fewer repairs in the event of damage, you can be offered a lower premium.

Your Financial Condition

While the condition of your business’ finances has little to do with the condition of your property, it will be taken into account by the insurance company. They want to be confident you can pay the premium on the policy you are requesting. As with your structure, make necessary improvements to your balance sheet and credit standing before applying for insurance.

Renewing and Negotiating

Your business property insurance policy will be for a specific period of time. At each renewal date, you have the opportunity to renegotiate. Be certain that if the conditions for your business, property or finances have worsened, your insurance company will raise the premiums. By the same token, if you have improved your standing, you can seek a lower rate. Insurance companies value your business and will do what they can to keep it, if you are a good customer.

More Extreme Steps

For most businesses, business property insurance is a must. The risk of a catastrophic event is too great, and few businesses have the financial strength to self-insure. If business property insurance is something you must have but current conditions make it too expensive, consider an extreme step such as moving your business. A new location gives you the opportunity to have an operation that is insurable at a more affordable rate.


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