With costs rising across the board, maintaining margins and profitability is a challenge for Australia’s two million-odd small business owners.
Finding ways to cut costs is vital for many.
But some expenses are essential, and insurance is one of them. Without it, your business may struggle to bounce back after an accident or incident.
There are ways you can contain your insurance spend without compromising on the quality of your cover. Broker Technical Manager Michael White shares some tips.
Introduce better risk management practices
The insurance premiums you pay are a reflection of the risk your business represents to an insurer. Taking steps to lessen the likelihood of you needing to make a claim may enable you to secure appropriate cover for less.
“Whether it’s tightening up your safety protocols, investing in training for your team or beefing up security at your premises, demonstrating your commitment to risk prevention can really pay off,” White says.
Shop around for value
The insurance market is competitive, and it pays to shop around.
But comparing your options and haggling for the best price can be time-consuming. Working with a broker or adviser takes the hard work and hassle out of the process, according to White.
“They’re connected with multiple providers and can negotiate competitive premiums on your behalf,” he says.
“Demonstrating you’re a responsible and careful operator can lead to lower premiums over time”
Bundle your policies
Many small businesses offer substantial discounts to customers who buy multiple different products or purchase in volume. Insurers do the same, which is why it can pay to bundle your policies with a single provider.
“Having all your coverage under a single umbrella is easier to manage and can be more economical than, say, sourcing your property, public liability, and cover from three different insurers,” White says.
Workers compensation is an exception and cannot be bundled with other insurance. In some states, this insurance is managed by a government insurer who has a monopoly. Often, the rates are prescribed and claims history is the only factor that can affect the rate positively or negatively.
Review your excesses and limits
It’s possible to reduce your premiums by increasing your excesses – the amounts you agree to pay when you make claims on your policies.
“This is a straightforward way to save some money, provided you’re in a position to pay that increased amount, should you need to lodge a claim,” White says.
Similarly, it can pay to review your policy limits – the maximum payouts you’ll receive if you make a claim. Your broker or adviser can help you ensure they’re commensurate with your risk profile and not excessive for your circumstances.
“Some policyholders reduce their insurance costs by taking a lower sum insured. In the case of insurance on buildings and contents, they insure for significantly less than replacement cost, which is not a good idea,” says White.
Maintain a good claims history
A record of frequent or sizeable insurance claims can push your premiums up significantly. Prioritising workplace health and safety, implementing rigorous incident reporting procedures and taking steps to mitigate potential risks as you become aware of them can help you maintain a clean claims history.
“Demonstrating you’re a responsible and careful operator can lead to lower premiums over time,” White says.
Securing the best cover for your business
Reviewing your insurance regularly will help you determine whether it represents value for money for your business. A broker or adviser can help you evaluate your requirements and source value-for-money policies that fit your risk profile. To discuss your options, contact your broker or adviser today.
Important notice – Steadfast Group Limited ABN 98 073 659 677
This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your insurance broker or adviser as to whether these types of insurance are appropriate for you. Deductibles, exclusions and limits apply. These insurances are issued by various insurers and can differ.