As a business owner, you know why your products or services have their specific prices. Businesses price their products to cover the costs of production, labor, sales marketing, and other major expenses.

Prices also reflect post-sales costs, such as handling repairs or replacements under a warranty. At one time, many industries used a pricing strategy for their products that failed to reflect their true costs because a once-popular assumption promoted the belief that lower prices would result in increased sales, thus the higher sales volume would make up the cost difference. This strategy wasn't and still is not successful. It hasn't worked for the auto industry, the computer industry, or the insurance industry.

The problems of the insurance industry became apparent with the turn of the century and were drastically exasperated by several natural and financial catastrophes. Events such as terrorist attacks, hurricanes, housing market crashes, and banking meltdowns all substantially affected the insurance industry. For much of the 21st century, insurance companies have had to handle an increasing number of claims being presented many years after the associated policies have expired. In some cases, regarding things such as pollution, asbestos, and employment practices, insurance companies were asked to handle losses that policies weren't designed to cover. The insurance industry's attempts to gradually correct their pricing had to be sped up quickly.

All of that may make sense, but what does it mean for you? What can a business owner do to minimize their high insurance costs? Sacrificing the amount of protection you have for your business may seem like an easy way to save money, but this can really come back to haunt you in the future. So before you do that, consider the following strategies:

1. Review your coverage:

  • Take a close look at your insurance. Could you increase the deductibles to lower your premium?
  • Are you carrying physical damage coverage on commercial vehicles which - due to age, wear, or other characteristics - no longer makes financial sense?
  • Are you insuring items that you could replace out of pocket? Are there pieces of equipment that are insured when they could be replaced from operating funds without submitting a claim?

2. Review your exposures:

  • Could you reduce the premium by installing an alarm system or fire protection system? Would these premium savings offset the cost of the system?
  • Could you implement safety programs that would reduce the cost or make the insurance company more interested in providing coverage? For example: driver safety programs, back to work programs, safety training in proper use of equipment and job functions, etc.

3. Identify your insurance goals:

  • Do you need an insurance company that can provide loss control services?
  • Do you need an insurance company that can provide claim-handling services for your Workers Compensation insurance?
  • Do you need an insurance company that will allow you to make payments by phone or on-line 24/7?
  • Do you need an insurance company that has a local agent/representative that can assist you in your insurance solutions?

Shopping and price are not the only issues in insurance. What you don't know can cost you more in the long run than you could ever save in premiums. Discuss your situation with the insurance professionals at Williams Insurance. We'll help you make the choice that works best for you.


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