It is easy to appreciate and understand the importance of carrying a comprehensive commercial insurance program in order to offer protection in the event of a loss or claim. Very few people would dispute that insurance is a crucial part of managing a business, and that the lack of a solid insurance program could be detrimental to a company and its employees during a time of loss. Insurance often is classified as a necessary evil or an expense that simply cannot be avoided. Much of this belief stems from the fact that the average insurance buyer feels powerless when it comes to keeping costs down. However, contrary to popular belief, as the insured, you can help to determine the price of your premiums by following a few simple guidelines.
Evaluate and understand your true exposures
Because property premiums are derived partially from the amount of property to be covered, it is very important that you provide your insurance carrier with an accurate account of buildings, inventory, personal property and any additional costs your spa would incur in the event of a loss. Underestimating these factors can mean that you, as the insured, would have an inadequate amount of coverage. Overestimating will result in additional costs that are unnecessary to the business because the insurance company only will pay for the actual cash value or, in most cases, the replacement cost of the insurable property. Remember, insurance exists solely to restore an insured to the financial status that existed before a claim was filed. A person never should profit from a loss. Why pay premiums for limits that never will be afforded to you during times of trouble?
Invest in protective devices
Burglar alarms, smoke detectors and sprinkler systems could help your spa avoid a loss, or lessen the damage should one occur. Insurance companies often will offer certain credits to businesses that have one or more of these devices in place, thus resulting in lower premiums. Supply the insurer with photographic or videotaped evidence that these items are present throughout your facility in order to obtain these possible credits.
Combine policies or lines of coverage
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Some insurance companies will provide discounts or issue credits on premiums to owners who carry more than one line of insurance with that company. A perfect example is a package policy, which is when both the property and the general liability coverage are listed on one policy form. In some instances, the insurer will issue a package credit, which could yield lower premiums.
Consider higher deductibles
Carrying a higher insurance deductible and retaining a larger portion of the risk can help to lower insurance premiums. Keep in mind that, by doing this, you will be assuming a greater portion of a covered loss. Give serious thought to this fact very carefully before approving a larger deductible.
Complete periodic reviews of your insurance program
By reviewing your insurance program periodically, you will be able to better ascertain whether or not you are carrying too much coverage for your needs. Have your inventory levels dropped in the past few months? Are they higher at certain points of the year than others? If you answered yes to one or both of these questions, then maybe you should consider adding a peak-season endorsement onto your current property insurance policy. This will increase your coverage during a specified period of time when you are carrying greater inventory values. It will help to keep costs down because you only will be paying premiums during these time frames.
Implement loss-control practices
The implementation of good loss-control procedures can help to decrease both the frequency and severity of potential claims, thus keeping insurance premiums down. An example of this type of precautionary measure includes installing video surveillance in your storage area to help prevent employees from pilfering or stealing. This will result in what is considered by insurance companies to be favorable loss experience, which can have a huge impact on your premiums.
Offer a training program for new employees
An employer can help to minimize the potential chances of a claim being filed by properly training team members in the workplace. For instance, educating employees about a particular piece of equipment will ensure that they will be aware of the proper safety procedures that must be followed in order to prevent the possibility of an injury.
Request certificates of insurance from all independent contractors
Obtaining certificates of insurance from all independent contractors working in your spa—especially those who are being paid on a 1099 form—can help keep insurance costs down. Most professional liability policies are rated on the number of operators who are performing professional services. Why should you pay an insurance premium on someone who is being paid as an owner/operator? In essence, they are in business for themselves, and they should carry the necessary coverage to operate their business.
Practice good housekeeping
Keeping your workplace tidy can and will prevent claims, such as falls. Fewer claims can mean cheaper premiums in the long run. This is the recommendation that is the easiest to accommodate and should be practiced by all spa owners.
Utilize an experienced insurance broker
Hiring a knowledgeable insurance broker who specializes in your industry can help you make sure that you receive the broadest possible coverage for the most affordable price. This is vital when costs are an important factor, because a specialization in a particular area enables a broker to focus on issues that are specific to your industry and avoid those that are not.
Get more bang for your buck
By adhering to these simple recommendations, you can ensure that you don’t pay more for your insurance coverage than is necessary. Premiums, like taxes, always will be an unavoidable fact of life. However, by taking these measures, you can get more bang for your buck when it comes to protecting your spa and your team.