Running a business isn’t free, so it makes sense to cut costs and save money wherever you can. As a pragmatic business owner, reducing your expenses is part and parcel of growing your business — but cutting corners on the necessities will do more harm than good. In this blog, we’ll explore how to reduce business insurance premiums without sacrificing the coverage you need.
Below are eight ways to reduce insurance premiums.

#1 Encourage Healthy Living
Lowering your workers’ compensation or health insurance premiums can go hand-in-hand with encouraging healthy behaviors in the workplace. Offering gym memberships as an employee perk, encouraging company walks over lunch, and putting a “no smoking” policy in place may help you secure a reduced premium by showing an insurer you prioritize employee health.
#2 Classify Employees Correctly
Businesses that purchase workers’ compensation coverage are assigned one or more classifications — all reflecting the nature of their operations. For instance, a construction company is assigned one type of classification (denoting that the organization is a construction company), whereas a restaurant will be assigned the classification of a restaurant.
Each classification comes with its own rate, which reflects the riskiness of the operation and the likelihood of employee injury on the job. The riskier the operations, the higher the rates will be, generally speaking.
Because the rates you pay for workers’ compensation insurance depend on the classifications assigned to your business, it’s important to ensure your business is classified correctly.
#3 Train Your Employees on Safety
What is the best way to keep your insurance rates? Well-trained employees. Adequately trained workers are less likely to sustain on-the-job injuries. Fewer injuries mean lower premiums for your workers’ compensation insurance. Proper training is also necessary when it comes to cyber security — as phishing attacks, malware attacks, and ransomware are major threats to small and medium-sized businesses.
Whether it’s physical or cyber risks, educating and training your employees on safety procedures — and creating a workplace safety culture — is a great way to reduce business insurance premiums.
#4 Look for Overlapping Coverages
It’s likely your business isn’t exactly the same today as when it started. As your business changes, so do your risks and the coverage you need. It’s possible you’re over insured in some areas, or even carrying policies for risks that are no longer a factor for your business.
If it’s been a while since you’ve assessed your coverage, sit with a risk management and insurance professional to look for overlapping coverage or duplicate policies that can help you reduce business insurance premiums.
One of the common ways to lower insurance is to reevaluate your commercial auto policy. Auto physical damage losses — if you have this coverage — is valued based on the condition and age of your vehicle. Since all vehicles decline in value as they age, you may be able to save money on commercial auto insurance by eliminating physical damage coverage on older vehicles.

#5 Focus on Risk Management
A cost of risk management plan helps you identify and control threats to your business. If you’ve never conducted a risk management assessment — to understand how you can reduce everything from cyber security risks to practical workplace safety — you’re likely spending more on your business insurance premiums than you should be.
Something as simple as securing your premises with deadbolts, cameras, sprinklers, and monitored alarm systems can lead to discounts on your commercial property insurance coverage.
Workplace safety plans help reduce or eliminate risks that can lead to accidents, injuries, and lawsuits. Fewer losses mean less money spent on insurance premiums.
#6 Pay an Upfront Premium
While a payment plan works better for some businesses, you can reduce your final costs by paying your premium upfront — as you may be able to receive a discount by paying in advance. If you’re a business that struggles with cash flow, be sure to speak to your accountant or CFO about paying premiums in advance.
#7 Raise Your Deductible
A popular way to reduce rising insurance rates is actually to add or increase a deductible. Commonly included in property and auto policies, deductibles are the amount paid out of pocket by you — the policyholder — before your insurance provider covers the expenses. When raising a deductible, always be sure the amount you select is a manageable out-of-pocket expense.
#8 Buy in Bulk
The same way you can save money when you buy paper towels in bulk is the same way to save money on insurance. Business owner policies are excellent options for getting the coverage you need at a slightly lower rate. Be sure to review your policies thoroughly for redundancies — remember, you shouldn’t have to pay twice for the same coverage.
You may, however, need a rider if your business is atypical and requires specialty insurance.

How to Reduce Business Insurance Premiums FAQ
Even though insurance is a part of everyday life, it’s not uncommon for people to feel lost — even when it comes to the basics. To help you gain a better understanding of business insurance, we’ve compiled a brief section of some popular frequently asked questions below.
What Is an Insurance Premium?
An insurance premium is an amount you pay for an insurance policy. Simply put, premiums are what you pay insurance companies in exchange for coverage. Therefore, when you hear “insurance premium,” think “insurance price.”
You typically pay premiums monthly, semiannually, or annually, depending on the policy.
How Are Insurance Costs Determined?
Insurance premiums vary based on the coverage and the person taking out the policy. Many variables factor into the amount that you’ll pay, but the main considerations are the level of coverage that you’ll receive and personal information such as age.
Why Do I Need Insurance?
Businesses need business insurance because it helps cover the costs associated with property damage and liability claims. Without business insurance, business owners may have to pay out-of-pocket for costly damages and legal claims against their company.
Is Business Insurance Tax Deductible?
Business insurance is considered one of the costs of doing business. That means you can deduct insurance premiums that serve a business purpose, such as your premium for general liability insurance or professional liability insurance.
What Business Insurance Do I Need?
Depending on the nature of your business and any insurance that you are legally obligated to carry, the following types of business insurance should be considered essential:
- General liability insurance. Coverage against accidents, injuries, and negligence claims.
- Product liability insurance. Coverage against product defects.
- Professional liability insurance. Covers professionals against malpractice, negligence, or errors.
- Commercial property insurance. Coverage against damage to your business property, such as from a fire or a severe storm.
Does Business Insurance Cover Subcontractors?
This is one area where many business insurance policies differ. General liability insurance generally does not protect independent contractors or subcontractors. This means your insurance likely does not cover independent contractor mistakes or protect your customers from them.
How Do I Improve My Insurance Score?
How much does business insurance cost? It all depends on what type of coverage you need — and your credit score. An insurance score — which is tantamount to a good credit score — is a factor insurance companies take into consideration when setting the cost of an insurance policy. To improve your insurance score and help your insurance premium decrease, you should work on the following:
- Paying bills on time
- Avoiding too many hits on your credit report
- Limiting the amount of debt you take on
If you can only work on one of these at a time, that’s okay. But working to improve your debt to income-ratio and your credit score can help you get the best deals on insurance for your business.