6 Ways to Lower Your Business Insurance Costs
Successful business owners mandate their company to have insurance. From the employees to the property, everything should be covered for that “just in case” situation. Of course, protecting all company assets can get very costly, especially for roofing companies. Below are the 6 ways to lower your business insurance costs without lowering or removing benefits and coverage.
- Accurate Employee Classification – When a roofing company applies for an insurance quote, they are asked to estimate the number of people they employ as well as their responsibility for the upcoming year. Obviously, this is all an estimate, but I’m more focused on calculating the correct rate. A roofing company with 20 employees will default to 20 employees who are rated as roofers. Roofing is one of the riskiest exposures for an insurance company to cover. So my recommendation is to create job responsibilities for each employee. Any person who remains inside the business should be rated as “Clerical,” which is normally one of the lower-rated risks for insurance. A good rule of thumb is that anyone who works strictly behind a desk and handles the office administration should be rated as clerical, NOT as a roofer. Another missed classification surrounds salesman vs. roofer. If the employee’s primary responsibility is as a salesman, make sure they specify “Outside Salesman” (there is a difference between “Inside” and “Outside” salesman). Rating an employee as a “Roofer” should only happen for installers who spend over 50% of their day on the roof. If a company has a “Foreman”, make sure he is also classified as such, which is a lower rate than a roofer. Foreman is risky, but not as risky as a roofer. The one takeaway should be that each employee’s responsibility is different and should be rated as such. Do not let your insurance company rate your company improperly; this is the best way to reduce your premium.
- Safety Procedures/Training Programs – Having a safety program in place will reduce insurance rates. Insurance carriers rate all companies based on how risky they are in a given market. By proving you are serious about safety, with proper documentation about your safety procedures and training programs, the rate should be reduced accordingly. If you can show not only that you have safety procedures in place but also that your company’s training is mandatory and extensive, it goes a long way in bringing down your organization’s premium.
- Create Healthy Work Environment – A relatively new premium reduction surrounds not only the classification of work but also the health of the employees. If a company can show that they have a wellness program (gym membership, health coach, non-smoking programs, exercise incentives), they could be eligible for an insurance discount. The idea is that having healthier employees will reduce the risk of an organization because the employees will not experience as many smaller claims (muscle strains) and larger claims (heart attacks, broken bones, falls from a roof).
- Buy Direct Not Through a Broker – Many companies purchase through a broker because they can ensure you have proper coverage. The problem is that they charge a good amount for their services. If you feel confident that you know what insurance you have and need, then consider purchasing the insurance directly. This will reduce your insurance costs because you will no longer have to pay the high fees associated with an insurance broker.
- Increase Policy Deductible – If you do not want to reduce or remove coverage but want to reduce the price of the insurance policy, another idea is to amend your policy deductible. If you increase your policy deductible, the cost of insurance will decrease. This is a good plan of action if your company losses have been minimal or non-existent and you feel confident that you can sustain that and handle the extra risk. Remember, even though you are not physically reducing your coverage or their limits, indirectly you are exposing your company to more potential insurance payments.
- Shop Different Carriers – Insurance companies tend to offer similar coverage, so don’t hesitate to ask around to see if another carrier can offer a more attractive rate. There is no harm and usually no fee to receive an insurance quote. Insurance carriers do not want you to shop (hence the discounts for bundling multiple products), so it may take some extra time to ask around, but the savings in annual premiums might be worth it.
Purchasing insurance for roofing companies is an expensive and stressful endeavor, so any way to minimize that financial burden will go a long way in alleviating some of those headaches.