How to Rightsize Your Insurance Budget

When it comes to business insurance, there is no one-size-fits-all solution. Deciding which coverage options are necessary for your operations comes down to a careful evaluation of both needs and budget. Various factors can influence your insurance budget decision-making.

Lowest Premium Isn’t Always Best for Your Insurance Budget

If you’re on a tight budget, you might be drawn to the most affordable option immediately. While the price may be enticing, the policy may fall below what you need.

Premiums are often inversely tied to deductibles. This means that less costly policies generally come with more out-of-pocket costs when certain claims need to be filed; such policies may also have lower coverage limits.

Take a cheap commercial auto policy, for example. The monthly cost may be low, but if a driver gets into a collision, the plan might cover only a fraction of what a higher-tier policy could cover—ultimately costing you more in the long run.

Considering this, the “right” business insurance policy balances price with suitable protection for business risks.

Focus On Needs Rather Than Wants

Another essential consideration when rightsizing an insurance budget is picking coverage to include in your policy. Some insurance may be nonnegotiable and should be prioritized. Commercial auto liability insurance is often required by law for businesses that use vehicles.

For businesses with a mortgage or lease, general liability insurance may be required as part of those terms. For businesses with employees, workers’ compensation may be mandated. Professional liability insurance may be necessary for contract agreements for professional services organizations.

Conversely, if certain coverage isn’t critical or if the risk is low for related events, consider self-insuring such instances. Your broker can help assess your circumstances and make recommendations in this area.

Be Straightforward With Your Broker

Your broker’s job is to help you secure insurance that meets your legal requirements, business needs and budget realities. Be direct with them about what you might need and want covered. They can help talk through options, such as implementing risk-mitigation techniques rather than retaining insurance coverage in certain areas.

Contact First Priority Insurance Agency  today to start a conversation. We can work directly with your business to identify critical coverage without unnecessary extras.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.