How does inflation affect your business insurance coverage and premium?
Inflation affects all of our daily lives, both personally and professionally. Business insurance rates are expected to increase across most lines of coverage this year, with many sectors likely to experience double-digit increases.
According to the Boston-based brokerage̵7;s “State of the Market” report, no coverage lines are expected to see rate cuts, and only a few lines, such as workers’ compensation and surety, are expected to see unchanged renewals. “The largest rate increases are expected for cyber liability, with increases of 30% or more forecast, on top of average 50% increases last year,” said Risk Strategies, the trading name of RSC Insurance Brokerage Inc.
Prices for an average quality property risk with some catastrophe exposures are also forecast to rise between 10% and 20%, with unfavorable high-risk properties expecting to see rate increases upwards of 25% or more. We could also see general liability and auto liability up 5% to 10%; umbrella prices up 10% to 20%; private company management responsibilities up 10% to 30% and public company management responsibilities up 5% to 30%.
If you have any questions, contact our office at 413.475.7283 or fill out our online quote form for an insurance review today!
Other factors that increase insurance costs
You have probably noticed higher prices in many parts of your life. From food and gas to building materials. Unfortunately, the insurance industry is not immune to this trend. These factors are beyond your control, as well as that of your agent and insurance company. In the event of a loss, there may be materials and labor needed for the repairs. With the price of building materials – such as plaster, shingles, timber and copper wiring – rising an average of 26%, repairs have become more expensive to fix and replace.
Ways to help reduce your insurance premium
Reviewing your policy annually will ensure you have the right coverage and help you identify where you can save some money. Here are 8 considerations when reviewing your business insurance.
- The importance of evaluating the policy annually
It can be tempting to watch your policy renew, make the payment automatically, and let it roll. As a business owner, you have a lot on your plate and reviewing insurance cover may not be a high priority.
As scary as it may seem, it is in your best interest to sit down and carefully review your policy. It’s important to always talk to your agent and ask questions about changes in your business, adjustments to your business model, or even rate changes if you see them. Your Encharter agent will be more than happy to review any questions or concerns.
Keep in mind that this is also another opportunity to make sure you’re protecting your business to the best of your ability and only paying for what you need.
- Minimize risks
To effectively reduce risk, a safety training program or risk management review will help reduce the risk that you will ever need to make a claim, therefore ensuring that your premiums should avoid uncontrollable rate increases.
- Classify employees properly
There are many industries with high rates of workplace injury, and if you or your employees are inadvertently placed in one of these categories, you may find yourself paying unnecessarily high premiums.
Resist the temptation to downplay possible dangers. Consult with your agent to convey any risks you have so they can offer coverage for all your exposures.
- Improve security protections
Security systems, fire sprinkler systems, worker safety programs and driver education programs are some methods that can reduce insurance costs.
If you or your team members handle sensitive customer data, it is relevant to maintain robust security protocols to reduce your exposure to cybercrime. Insurance companies evaluate risk and your insurance agent or broker should be able to help you identify problem areas so you can set up a program that works for your business. Ask your Encharter agent about cyber insurance.
- Change your deductible
Its simple math: increase your deductible, lower your premium. But you need to decide what your business can reasonably afford should it become necessary to make a claim. Larger companies can comfortably handle deductibles in the thousands while smaller companies can operate on a tighter margin and desire more limited expenses.
There is no fixed rule when it comes to deductibles. Each company must independently evaluate their needs and determine how much of a deductible they can afford that works best for their budget.
- Pay your premium in advance
You can reduce your final costs by paying in advance. If you’ve been on a payment plan, you’ve probably paid a fee for this privilege.
- Look for discounts
Don’t be afraid to ask for discounts. Do you have all your insurance with an agent? Some companies offer discounts for multiple industries. Talk to your Encharter agent about what discounts may be available.
- Buy adequate coverage
Not all coverage is the same. Your Encharter agent will help you find coverage that fits your unique business needs. Buy too much coverage and you’re paying for something you’ll never use, but too little coverage can leave you with gaps that unnecessarily expose you to a loss. With your insurance agent’s help, they will provide detailed explanations and protect against too little or too much coverage.
These are all ways to ensure that you are sure to monitor your business to the best of your ability to help reduce unnecessary costs.
It is important to do business with an insurance agent who has access to a wide range of insurance companies that you trust and who have excellent references. It’s always good business practice to do your research and invest wisely when it comes to spending your money, and buying insurance is no different.
Have you reviewed your business insurance recently? Chat with an Encharter agent today: 413.475.7283
or book an appointment here.