25 Sep Insurance Talk — Saving Money on Business Insurance Costs
Rex and Cheri have the answers. Listen here.
Insurance Talk — Saving Money on Business Insurance Costs
Cheri Martinen – Welcome to Insurance Talk. You are listening to Cheri Martinen and Rex Lesueur, the father-daughter team from Bancorp Insurance. We are an independent insurance agency serving our local community in Central Oregon, as well as thirteen other states. We like to help you with your commercial business needs as well as home and auto, and we help with Medicare and health insurance, too. If you’ve got questions, give us a call at 1-800-452-6826, or visit us online at www.bancorpinsurance.com.
Cutting Costs on Your Commercial Insurance
This is a pretty timely topic. We talked about how we can save money with your personal insurance on a previous podcast. Now, we’re going to talk about how your business can save money on its insurance costs during this time when things are tough.
General Liability Insurance
Rex Lesueur – The first thing to do is to take a look at your insurance, and the first place I would start would be your general liability. Property insurance is rated off of the value of the property so that’s probably not going to change. The replacement cost of the value of the property is not going to change during a recession. It’s still going to cost just as much to build that building, so looking at your property is not the first place you look.
The place you will want to look first is your general liability. And the reason is, your general liability is most often rated on your gross receipts or your payroll. If you’ve laid people off and your business is down, call your insurance agent and say, my gross receipts have been reduced and I’ve had to lay some people off. My payroll is going to be less, and you can adjust your payroll down and your receipts down. That’s the first place to look.
Commercial Auto Insurance
The second place to look is at your vehicles. If you have a small fleet of vehicles and typically run with five or six, and you’ve laid some people off and you’re running with two or three vehicles, take those surplus vehicles off, park them, make sure no one drives them while they’re parked and you can take them off the policy. That’s one way of doing it.
The next thing to do is look at your workers’ comp. Workers’ comp is based on payroll. If your payroll is down, you can call up your agent and say, my payroll is down, let’s take the workers’ comp down and we can reduce the payroll to what you anticipate it being. Now, with both general liability and workers’ comp, there’s always an audit, which means that at the end of the year they can come back and say, you said it would be X but it’s Y, and you either will owe us money or we’ll owe you money. So just be aware that that can happen. Even with the general liability and workers’ comp, if you do nothing, you could possibly get money back, but that doesn’t help you with your bills right now.
CM – If you’re a little proactive and you know that your payroll is down, just giving a call to your agent or looking for a new agent, calling them or calling us, you might be able to save a little bit of money right now.
Save Money on Deductibles
RL – Another area where you can save some money is deductibles. If you have on your property insurance, and this is probably the only place you can move on property, if you have a $1,000 deductible, look at a $2,500 or a $5,000 deductible. Be aware that when you’re looking at higher deductibles on property, there are diminishing returns. Let’s say if you go from a $500 to a $1,000 deductible and they save you $200, it’s going to take two and a half years for you to get that $500 back. If there’s a claim in reduced premiums, if you go from a $1,000 deductible to a $2,500 deductible and they give you the same $200, all of a sudden that’s going to take seven and a half years to get that $1,500 back.
Maybe that’s not enough. I’ve seen situations where we’ve gone from a $1,000 to a $2,500 deductible and the difference in premium is $25. You don’t do that. It’s just not enough reduction in premium to justify taking the higher deductible. Look at the same thing with your auto. If you’re running with a really low comp and collision deductible, we still have people out there with $100 deductibles on their comprehensive and $500 on collision, go to $1,000 and that’ll save you some money as well.
CM – All fun, very technical insurance tricks right here.
Find Where You Can Save on Insurance
RL – Well insurance is complicated, and you need to look at it. That’s why you need to rely on somebody who can talk to you about it and say, where can I cut? Where can I save? And be creative with doing it without totally gutting your insurance.
CM – So if you have any questions, give Bancorp Insurance a call, 1-800-452-6826. Or again, you can visit us online at www.bancorpinsurance.com.