In the evolving landscape of business insurance, managing your premiums effectively can result in substantial savings. As the industry continues to adapt to an ever-changing landscape, knowing and employing the right strategies can make a significant difference in your annual premiums. Here’s a comprehensive guide to help you reduce your business insurance premiums across various lines of business in 2025.
1. Don’t Treat Your Insurance Policy as a Maintenance Policy
Many businesses mistakenly view their hazard insurance policy as a maintenance policy. Insurance is for catastrophic events, not maintenance. It's designed to put you in the position you enjoyed prior to the loss. For example, if your company vehicle gets a ding while parked in a public space, don't file a claim to get it repaired. Pay out of pocket for the repair. Filing a claim for such a small incident will only cost you in the form of higher premiums in the long run.
2. Raise Your Deductible
Increasing your deductible can significantly lower your insurance premiums. For example, raising a deductible from $500 to $1,000 could reduce your premium by up to 10% (source: Insurance Information Institute). Just be sure you can afford the higher deductible in the event of a claim.
3. Request Discounts
Insurance carriers often provide various discounts that can reduce your premiums. Common discounts include:
- Continuous Coverage: Discounts for not having a lapse in coverage.
- Paperless Discounts: Opting for electronic statements and communications.
- Additional Policies: Bundling multiple policies with the same carrier.
- Prior Experience: Discounts for having a history of experience in your area of expertise.
- Prior Insurance: Rewards for having at least 1 year of previous in-force insurance coverage with another insurance company.
4. Maintain a Good Credit Rating
A strong credit rating can significantly reduce your premiums. Every major insurance company uses some form of an insurance scoring model to determine if the applicant has demonstrated financial responsibility. The models from one insurance company to the next will vary greatly. Each insurance company will match their model up against the information on your credit report. This process will produce an insurance score. Generally, a high credit rating will produce a high insurance score, thereby reducing your insurance premiums. Studies have shown that businesses/applicants with excellent credit can save up to 15% on premiums compared to those with poor credit (source: National Association of Insurance Commissioners).
5. Work with a Knowledgeable Broker
A skilled insurance broker can be invaluable. They can implement loss control measures and perform an annual policy review to ensure you’re getting the best coverage and rates. Their expertise can help you navigate the complexities of insurance and identify potential savings.
6. Avoid Duplicate Coverage
Ensure you’re not paying for duplicate coverage, especially with workers' compensation insurance. If you are the owner of a business and you have separate health insurance coverage, it would be wise to exclude yourself from your workers' compensation coverage. If you are injured on the job, you can always file a claim under your health insurance policy versus your workers' compensation policy. In doing so, you can reduce your workers' compensation premiums.
7. Implement Usage-Based Driving
For commercial vehicles, usage-based insurance (UBI) can lead to savings. Many insurance companies offer a discount if you allow them to monitor the driving habits of the people who operate your vehicles. By monitoring driving habits and reducing risky behaviors, you can potentially lower your premiums. UBI can provide discounts based on actual vehicle usage rather than estimated mileage.
8. Bundle Your Coverages
Bundling multiple insurance policies with the same carrier can lead to significant discounts. For example, combining property, liability, and vehicle coverage with one provider can reduce premiums by up to 20% (source: Insurance Information Institute).
9. Maintain a Clean SAFER Record
If your commercial vehicles require federal insurance filings with the Federal Motor Carrier Safety Administration, maintaining a clean Safety and Fitness Electronic Records (SAFER) report is crucial. Insurance companies use the information in SAFER to determine risk. "Out of Service" vehicle or driver violations on your record are viewed as "high risk" by an insurance company. A clean SAFER record demonstrates good safety practices and can significantly lower your insurance premiums.
10. Inform Your Broker About CDL Licenses
Even if your commercial vehicles don’t require a Commercial Driver’s License (CDL) to operate them, informing your broker that you or your drivers hold CDLs can lead to discounts. Many insurance companies offer reduced rates for vehicles driven by CDL-holding operators due to their higher training and safety standards.
11. Monitor Your Experience MOD for Workers Compensation Insurance
The Experience Modification Rate (MOD) measures your company’s workers' comp claim history compared to industry averages. In the absence of an actual Experience Modification report from the National Council on Compensation Insurance (NCCI), an insurance carrier will use a baseline of 1.0, which is average. If you are a below average risk (rated below 1.0), obtaining a copy of your Experience Modification can reduce your premiums dramatically.
12. Request a Premium Audit
Every insurance carrier will require that you estimate your annual revenue for general liability and workers' comp insurance at the inception of coverage to determine their risk, and thereby your rate. At the end of your policy term, if your actual revenue is lower than the estimate provided to the insurance carrier, request a premium audit. The audit will reveal a lower revenue total than projected, which will result in a return of a portion of the premium paid over the policy term.
13. Accurate Replacement Cost Estimates
Ensure that your building and Business Personal Property (BPP) replacement cost estimates are accurate. Overestimating or underestimating replacement costs can lead to inflated premiums or inadequate coverage.
14. Update Property Information
Provide updates on any changes to your property, including electrical, plumbing, heating, and roofing systems. Modern upgrades can reduce the risk of claims and may lead to lower premiums.
15. Add a Blanket AI at Policy Inception
Consider adding a blanket Additional Insured (AI) to your policy at the outset rather than paying for it each time a new AI is needed. Most insurance companies will offer a blanket Additional Insured for anywhere between $50 and $100. This one-time fee will cover all parties who wish to be an additional insured on your policy. Alternatively, if you elect to add Additional Insured's individually, you would be faced with a fee of anywhere between $50 - $100 each time an Additional Insured is placed on your policy.
Summary of Potential Savings
| Strategy |
Potential Savings |
Source |
| Raise Your Deductible |
Up to 10% |
Insurance Information Institute |
| Request Discounts |
Varies by discount type |
National Association of Insurance Commissioners |
| Maintain a Good Credit Rating |
Up to 15% |
National Association of Insurance Commissioners |
| Bundle Your Coverages |
Up to 20% |
Insurance Information Institute |
| Implement Usage-Based Driving |
Varies |
Insurance providers |
| Inform About CDL Licenses |
Varies |
Insurance providers |
| Accurate Replacement Cost Estimates |
Varies |
Industry standards |
| Update Property Information |
Varies |
Industry standards |
By applying these strategies, you can effectively manage and reduce your business insurance premiums. Regularly review your policies and work with your broker to ensure you’re optimizing your coverage and costs.
For more detailed advice tailored to your specific business needs, give us a call at 703-674-0299 or visit www.TCIIns.net.