SMB

Published on January 6th, 2015 | by Kandace H

0

Alternatives To Commercial Insurance For Small Businesses

Commercial insurance is a financial product that business owners like yourself can buy to invest in peace of mind and protection. While there is a chance that you’ll never have a need for your insurance benefits, the idea of knowing that your insurance portfolio will protect everything from your business property to your commercial space may give you the assurance that you need to work day in and day out.

Insurance does pass the burden of paying for losses and lawsuits on to a wealthy insurer, but passing this burden on comes with a cost. With the price of insurance climbing annually for many different businesses in industries that are considered risky, business owners are left looking for alternatives. If you would like to know what the alternatives are to traditional commercial insurance, read on and learn what you need to know to start planning.

Self-Insuring to Avoid Paying the Cost of Premiums

One of the drawbacks of buying insurance is the fact that you are left paying for protection that you’re not sure if you’ll ever use. You may be paying pennies on the dollar for benefits, but you’ll be obligated to pay whether or not you use your policy. When you self-insure, you are essentially just putting money aside that can be used to pay if a loss ever occurs.

The amount you’ll put aside will depend on the risks that are present. Some will put aside the money they’re saving on insurance premiums, or others will put a larger amount aside that covers business property and provides liability protection as well. If you do not have enough money to set aside to cover all potential losses, self-insure in some areas and carry standard protection with a high deductible to keep the costs down.

Create a Risk Reduction Plan to Eliminate Risk Factors

If you self-insure without having a risk reduction plan, there is a greater likelihood that you will experience a loss that you will have to pay for out-of-pocket. While several of the risk factors that are present in everyday business are out of your control, there are areas where the factors can be reduced or eliminated.

Choosing a safe area to operate, selecting a building with no fire loss experience, and staying away from areas prone to hurricanes and floods can help reduce risk. According to a specialist from Arpel Security Systems, well-formed security policies and fire safety programs will also contribute to a more secure work environment. By developing and implementing a risk reduction plan, you can forego your need for traditional cover.

As a small business owner, you do not want to watch a large portion of your revenues to go to insurance when it could be used to grow the business. Be sure to consider the risk of self-insuring, be realistic about costs, and make choices that you’re comfortable with.


About the Author


Back to Top ↑