5 More Ways to Lower Your Commercial Insurance Premiums

Why? Why? Why?

Many fleet owners have come to dread opening that email or envelope showing their upcoming commercial auto insurance premiums. Especially if they have not had any major claims, have good equipment and drivers, low turnover and strong financials.

Why are rates so high? Why do premiums keep rising? Why is this happening to me?

Bottom line: rate increases almost always are due to increased insurance risk. The parameters of insurance risk vary by region, kind of operations, and predictability, among others.

If most companies are average, then, on average, everyone would expect about an average year-to-year premium increase of about five per cent. This would seem reasonable, practical, and easily affordable.

The world, however, is cyclical in nature, and so is the world of insurance. Insurance is affected by economic cycles, weather patterns, regional trends, technology, and so on. All of these factors will have some effect, sometimes large, sometimes small, on premiums.

The key thing, then, to keep insurance premiums stable or from rising to an unreasonable level, is to control those things you have direct control over.

I have worked on the loss-control side with many operations in a number of industries and have found it is always helpful to differentiate yourself. Differentiation means doing the few extra things which will improve your risk profile and make your organization stand out from the others.

In some cases, it means doing a few more things that you probably should be doing anyway. In other cases, it might mean adopting an new attitude or mindset, taking a fresh look at things with an eye to improvement.

I grew up in trucking. I’ve owned trucks. Looking back, I can say this with certitude: there were some things we did well, there were some things we did the hard way—not from a lack of trying, but from simply not knowing what we didn’t know.

So we continue on with our series of proven ways to level up your insurance game.

Five More Insurance Saving Tips

2021 Insurance Saving Tip #15

Ask your agent if you can get a discount for being a member of a business, professional, or trade association.

If you operate speciality equipment like cranes, concrete pumpers, oversized-load hauling equipment, and the like, that requires adhering to standards beyond the norm (usually requiring special riders or endorsements to your policy), chances are the insurance company may offer a membership discount, if you join the representative association for your industry.

Sometimes this question will be in the insurance application.

Bonus Tip 1: Pay attention to all of the questions on the insurance application. The insurance underwriters do. The questions will tell you what things are important. No questions are there to fill up space. And be accurate in your responses. Never simply turn in an old application.

Bonus Tip 2: And always ask your agent for a list of available or perhaps new discounts. The insurance industry is changing and is in the midst of a huge turnover in staffing, combined with digitization of business processes. Don’t let any possible discounts fall through the cracks because of this change.

As successful fitness entrepreneur Jennifer Cohen says: “Be bold. You need to ask for what you want. Period.”

2021 Insurance Saving Tip #16

Move up the insurance food chain: Work with a broker instead of an agent

If it’s time to do some serious cost-containment on your commercial insurance, and you are looking to change agents (or your agent has moved on, retired, etc.), consider working with a broker, not another agent.

Why work with a broker?

One primary difference is that the agent works for the insurance company, while the broker works directly for you. The broker uses their expertise and experience to get you the best possible rates. The broker’s recommendations are unbiased and favor the buyer, the insured, not the insurance company, Brokers can provide you with best value in insurance coverage.

Insurance brokers represent multiple insurance companies. The broker cannot “bind” a policy but will connect you with an insurer or insurance agent to complete the process. And likely a better rate.

You can ask your agent if this would be helpful, or contact your insurance company directly for a list of brokers they deal with.

2021 Insurance Saving Tip #17

Here’s a big ‘don’t’ when getting an insurance quote: Never ask more than one agent or broker for a quote.

(The only exception is having another agent/broker for highly specialized insurance your regular agent/broker cannot provide. But this same rule always applies . . .)

Why is that?

Attempting to utilize several agents at a time, or, if get your insurance through a broker, several brokers at a time, is not at all helpful in getting a good, solid quote. Most agents and brokers pride themselves on their relationships with customers. They will do everything in their power to make sure you get their best possible quote. Attempting to play one against another is a zero-sum game that will strain the relationship, and indeed can work against you in the long run.

It’s best to always follow the time-honored tradition in insurance of having only one agent or one broker at a time. A good agent or broker is worth their weight in gold and an asset to your organization.

As Napoléon Bonaparte said, “If you issue an order, then a reorder, you will end up with disorder.” This same observation applies when procuring insurance. Be strategic. Stay in the long game.

2021 Insurance Saving Tip #18

Never finance your insurance policy directly though the insurance company.

Why is that?

Here are some good and valid reasons to arrange outside financing for commercial insurance:

  1. Outside financing will generally cost you less, saving money.
  2. If a payment is late, you can be cancelled. I’ve seen some companies in Excess & Surplus lines (E&S) add on a 25% penalty for early policy cancellations. (Read all the paperwork!)
  3. If you do get cancelled, this can make it harder (more expensive) and more difficult to find insurance. Every insurance company asks if you have been cancelled. It’s a red flag!
  4. If you do get cancelled for nonpayment, the insurance company will very likely not continue the policy.
  5. If you drop vehicles due to a change in operations, you might be paying the finance company for months before everything gets all sorted out. This can really impact your cash flow.
  6. Breakdowns, loss of a good customer, and other factors can push any company into a hard place, making the monthly commitment to the insurance finance company very difficult.

If at all possible, do your best to keep insurance and the financing of the insurance separate and apart from each other. It will save money and could even save the business . . .

2021 Insurance Saving Tip #19

Do not haul cannabis. Period. Even if it is considered state “legal”

Now, why would that be?

We’re talking about the insurance angle here. Most commercial insurance policies clearly state they will NOT underwrite any illegal activities. A policy is simply a contract.

The sale and distribution of cannabis is federally illegal in the U.S. For some, perhaps 15% of the population, cannabis is known to be an addictive substance and sales are exploding.

It’s a fact: insurance companies are finding they can walk away from cannabis-related claims due to the federal illegality of cannabis and the courts will stand behind them.

It’s perhaps best to simply avoid problems: Stay away from hauling cannabis.

See: Why Your Cannabis Contracts May Be Unenforceable Even if State Law Says Otherwise

Disclaimer: This is not legal advice, only insurance-savings information. Seek any legal advice from qualified legal counsel.

Thank you for reading this.