A commercial insurance policy is a key component in protecting your business and making sure it remains profitable. The cost of the policy directly reflects the potential cost of claims that could be made against your company. It is important that you understand how different factors, such as annual premiums, deductibles, and coverage limits, affect the cost of your commercial insurance policy. Here are some ways to save on your commercial insurance premium.
Why you need a commercial insurance policy?
A commercial insurance policy is important because it protects your company from lawsuits. If you have a commercial insurance policy, the insurer will defend you in court and pay for any settlements or judgments made against your company.
Commercial insurance also provides protection for your business in the event that property is damaged or destroyed due to various events, such as fire or flooding, or if someone is injured on your property.
Your commercial insurance options
There are many different types of commercial insurance policies available. For example, there are general liability policies that cover any potential claims for bodily injury or property damage arising from your business operations. There are also professional liability policies that provide protection for your company’s employees.
When selecting a commercial insurance policy, it is important to know the coverage limits and deductibles you can expect to pay. These will be the factors that determine the cost of your premiums. For instance, you may have a higher deductible for your property insurance than for your general liability policy in order to save on premiums. By knowing what types of claims could potentially happen and how much they would cost if they did happen, you can find ways to save on premiums by tailoring your plan appropriately.
Factors that affect the cost of your commercial insurance policy
Insurance companies use many different factors to determine the price of your policy. These factors include, but are not limited to, the following:
- The type of coverage
- The size of the coverage
- The deductible
- The limits of liability for each area
- Your business type (e.g. restaurant, retail store)
- Your location
- Your industry
- Your credit score
This list is by no means exhaustive, but it does provide a good overview of the factors that go into determining your premium. There are some ways that you can save on your commercial insurance premium, tho. One way is to increase your deductible in order to lower your monthly premiums. For example, if you are willing to pay more per claim when they happen in order to save on your monthly premiums, you could raise your deductible from KES 100,000 per incident to KES 200,000 per incident. This will lower your monthly premium because fewer incidents will require a claim and have their cost deducted from the policy.
Ways to save on your premiums
There are a number of different ways that you can save on your commercial insurance premiums. You can do this by either raising or lowering your deductibles, choosing coverage that fit the needs of your company, and using an agent to shop for competitive rates.
Raising your deductibles:
One way to reduce the cost of a policy is by raising the deductible on it. A higher deductible means a lower annual premium. For example, if you had a KES 100,000 deductible and a KES 50,000-per-claim limit, you would pay less for an annual premium than if you had a KES 25,000 deductible and a KES 200,000 per-claim limit.
Choosing the right coverage
The amount of coverage you choose is another factor in determining how much your policy will cost. There are two types of coverages available: Occurrence and Claims Made. In occurrence coverage, your business pays for any damages caused during the length of the policy period – even if the damage occurred before the policy was purchased. In claims-made coverage, your business is only responsible for damages that occur during the time frame specified in the contract – whether they were done before or after purchasing it.
Using an agent
A final way to save on commercial insurance premiums is by using an insurance agent to shop for competitive rates from various providers in their area. Some agents may specialize in certain areas of insurance such as auto or property but some may offer multiple types of policies including commercial insurance policies.
How does insurance premium financing work?
Commercial insurance premiums are not always paid in one lump sum, particularly if you have a high deductible or a complicated policy. Instead, it is common to make payments throughout the year. Insurance premium financing allows you to pay your premiums in installments over time at an interest rate that is typically lower than your credit cards.
The benefits of commercial insurance premium financing
- No monthly payments – The interest rate is fixed and paid in one lump sum at the end of the term.
- Affordable monthly payments – Most lenders allow you to choose your monthly payment amount, within certain limits.
- Interest-free period – You have a grace period before interest begins to accrue on your loan; this can be anywhere from a few days to several months depending on the lender and policy term length.
- No prepayment penalty – You can pay off your loan early without incurring additional costs.
Insurance Premium Financing (IPF) Methods
There are two main methods for financing commercial insurance premiums:
1. Line of Credit.
This allows you to borrow as much money as you need and make payments when you have funds available.
2. Loan.
With this method, you borrow a set amount of money and make monthly payments until the loan is paid off.
Commercial insurance premium financing is a short-term solution for capitalizing on the interest tax deduction for commercial insurance premiums that cannot be deducted in one year but can be spread out over several years through financing. This form of financing usually comes with higher interest rates than other types of loans, so it is important to check the rates with multiple lenders before signing any agreements.
The deduction for commercial insurance premiums cannot be deducted in one year. You can spread out the deduction over several years with financing. You must have a taxable profit to deduct the premiums. The premium amount must also exceed 2% of the business income for it to be deductible.
If you need money for your business but are unable to get a loan from a traditional bank, you can consider using Mwnanchi Credit as your alternative lender. We offer a wide range of loans in Kenya, which you can choose from.
Reduce your commercial insurance premium with these tips.
Commercial insurance policies are an important component of protecting your business. The cost of the policy reflects the potential cost of claims that could be made against your company. It is important that you understand how different factors, such as annual premiums, deductibles, and coverage limits, affect the cost of your commercial insurance policy.
The following are some ways you can save on your commercial insurance premium:
- Reduce your number of claims in any given year by making sure your employees are trained on the proper use of the equipment and when to take breaks when using heavy machinery.
- Provide enough coverage by understanding what’s not included in a typical commercial insurance policy (e.g., dkproperty damage), then adding that coverage accordingly.
- Get quotes from multiple carriers to get the best deal for your company.
- Use your insurance agent to help you understand the different policy options available, including deductibles and coverage limits.
- Ask your agent to help you choose the right deductible, which is the amount of money you pay out of pocket before your insurance kicks in. A higher deductible can lower your premium.
- Choose a policy with higher coverage limits. Higher limits mean you’ll pay less out of pocket if something bad happens.
- You can also save money by buying the right amount of property insurance for your business. For example, if your business owns or leases expensive equipment or real estate, you may need to buy additional coverage to help protect these assets against damage or loss.
Which is a type of insurance to avoid?
There are many types of insurance to avoid. Some are more obvious than others. For example, there is no reason to buy life insurance on your business owner if you do not have dependents and you do not need the money. This is a waste of money and can often be obtained through a group plan at a much cheaper rate.
Conclusion
Cost is a major deciding factor when it comes to selecting a commercial insurance policy. Commercial insurance policies are designed to provide protection for your business in the event of a disaster-related catastrophe, so it’s important to know the right coverage for your business.
