(This column originally appeared in The Inquirer)
Over the last two decades, insurance premiums for commercial properties have steadily increased, costing business owners thousands of dollars to protect their workplaces. Unfortunately, the trend is continuing this year.
According to experts, there may be another 5% to 25% increase in property insurance rates in 2024.
How can businesses — particularly small businesses — keep their insurance costs under control this year? Here are few things to consider.
Work with a broker
Some insurance companies offer policies directly online. But buying insurance is complicated, which is why it’s important to work with a good broker who communicates in a timely fashion, understands your needs, and is looking out for your interests.
“A competent insurance broker will have access to multiple, well-rated insurance carriers and take the time to shop policies on your behalf in order to find the best coverages and pricing,” said Brian McCollum, who owns McCollum Insurance in Manayunk. “They’ll provide you with unbiased advice and advocate for you if you have to file a claim.”
Shop around
Colleen Terra, who owns Terra Insurance Services in Philadelphia, thinks it’s also important to shop your policies every year. She says that a good broker will always be looking for the best price for their clients.
“It doesn’t cost us anything to shop policies, and by looking out for our clients’ best interests, we’ll be able to keep them for a longer period of time,” she says. “If you’re seeing an increase in premiums, you should always be pushing your broker to shop around and look for better deals.”
Share everything with your broker
Terra wants to know everything about the clients she represents so she can match the best policy to the situation and sometimes gets frustrated when her clients don’t reveal all the information about their companies — the type of work they perform, the number of workers and contractors they employ, and how much they pay.
“Tell me everything that you’re doing, and that way I’ll be able to get you the insurance you need,” she tells her clients. “The more information I have, the better price I can get.”
Service matters
Both Terra and McCollum also say it’s not always price that should be the determining factor when searching for insurance coverage. The level of services and responsiveness of a carrier are also very important.
For example, the Hartford Insurance Co. — which insures more than 1.5 million small business owners — recently built a platform for their customers that’s available 24/7 for them to request and receive certificates of insurance with a short period of time. (The Hartford is a client of my company.)
“It’s a big deal if you’re a small-business owner and have to wait for your insurance company and it could potentially delay work or even payment,” said Christopher Jones, head of small commercial at The Hartford. “In most cases, our system can deliver a certificate within minutes of requesting.”
Consider bundling
When you find a good carrier, consider bundling policies with them. Many carriers offer business owners’ plans that combine key coverages — liability, property, cyber — in one plan and at a discount.
McCollum says that when you bundle your policies, you can often get the best pricing.
“It also allows a business to work with one broker for all their needs,” he said. “This becomes important when it’s time to report a potential claim.”
Ratings matter
It’s also important to make sure you’re dealing with insurance carriers that have high ratings. While it’s no guarantee, ratings services like AM Best evaluate the balance sheets, operations, financial performance and other factors — such as the ability to meet short- and long-term obligations — in order to determine a carrier’s reliability with grades assigned ranging from A+ to D. These ratings fluctuate year to year so it’s important to look at a carrier’s historical record as well as its current year rating.
Keep good records and carry an umbrella
When it comes to reporting claims, both McCollum and Terra agree that no one can foresee these things, but the more prepared you are, the better. This is accomplished by keeping good documentation — including photos and receipts — for significant assets as well as complete payroll records and insurance certificates from brokers or outside parties.
Finally, lean in into umbrella coverage. This type of coverage is sold over and above your existing coverage as an extra layer of protection. It tends to be affordable and can be important if ever a big claim is filed.
“An umbrella policy is a relatively small portion of your total insurance cost and can be very helpful if something goes wrong,” Jones said. “We’ve been seeing more business owners buy this type of policy over the past few years.”
