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Picture: 123RF/GAJUS
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To protect yourself and your company in today’s business environment, you need to assess the risks your business faces and choose your insurance cover accordingly.

There are many types of business insurance policies available, offering a broad spectrum of insurance protection from equipment, property and buildings, to business assets, liability and business interruption insurance. Your business may require more than one — or a combination of policies — to suit your company’s needs. 

The price of your policy will be determined, as with all insurance, by risk vs likelihood and the potential severity of the incurred loss. It’s important not to think of your insurance policy as an all-encompassing safety blanket, as this kind of rationale can increase costs. 

To illustrate, a student driving a Golf GTI will pay more for their insurance vs a 50-year businessperson driving the same car, because a student presents a higher risk for the insurer.

The cost of your insurance will be based on the nature of your business, the industry in which it operates, the services offered or the products you handle. 

While there are many factors that affect the costs of your business insurance, there are just as many precautions that can be taken to keep costs down. 

These eight tips will help make your business insurance policy work for you at a price you can afford.

Behave as if you are not insured 

This is the best advice when it comes to insurance. Clients who act as though they are insurers will implement risk management measures to reduce any potential impact on their business when a loss occurs. They might consider an armed response alarm system, reducing the time a burglar will have to get away with goods. They may implement better stock control measures to reduce losses. They will make sure their fire extinguishers are regularly serviced in case of a fire. Thinking like you are not insured makes you more risk-aware and encourages risk mitigation processes and measures. Insurers will recognise these measures and often discount your premium.

Consider the things that can put you out of business 

Cover these risks adequately and don’t skimp. The cost of insuring against your business burning to the ground is generally cheaper than insuring your laptop. 

Generally, don’t sweat the small stuff 

Items such as cellphones, for example, are costly to insure because they have a high frequency of loss, which essentially pushes up your premium. 

Implement thorough internal controls to reduce and manage potential loss

This could include making employees accountable and aware of their responsibility to your company. 

Consider higher excesses  

This will bring premiums down quite a bit. You may find that keeping a reserve fund to cover an excess, should you need to claim, is a better system for you, saving money each month instead of paying a premium for lower excesses. This will of course be determined by the financial position of the business and how you manage your internal controls.

Maintain your assets  

Insurers will often inspect the risk they are taking on. Well-maintained assets that may be risks will not incur any additional improvement costs and are well-respected by insurers. Insurance companies seeing this sort of result will be more flexible on pricing.

Take your insurer’s advice on improvements

Your insurer may, however, recommend some improvements. By making these improvements, your risk will be reduced, and your policy cost will decrease. 

Partner with your broker 

Last, but certainly not least, your broker needs to understand your business, its financials, and what kind of a risk taker you are. These are the factors that drive your insurance costs up or down.

Taking these steps can help manage your business insurance costs, simplify your policy, and give you cover for exactly what you need.

About the author: Jurgen Hellweg is Western National Insurance CEO.

This article was paid for by Western National Insurance.

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