There are two things you can influence which affect premiums: Cover (i.e. what and how much you are insuring) and Claims.
There are four main elements to Cover and you need to look at all of them:
• Excess - the amount of each claim, which you, not the insurers, will pay. Increasing this should lead to a reduction in premiums. How big an excess you should have depends on how much you or your business could afford to pay.
• Limit - a maximum that insurers will pay, either for each claim or in total for any year: the lower the limit, the lower the premium. The right limit for you depends on how likely it is that you will have a claim above that level, and how damaging it would be to your business.
• Exclusions - things the policy does not cover. There should be a reduction in premium for each exclusion. There is no point in paying a premium to cover an event that is not possible in your circumstances e.g. demolition work, if you only build or repair property and never demolish any.
• Extensions - the opposite of exclusions: non-standard items added to your policy, at extra cost. Do you need them?
If this process results in higher premiums, because you decided to opt for more cover, you should still see it as a saving, if you compare the extra premiums with what an uninsured claim might cost. Real waste usually occurs when you are paying for more insurance than you need, not when you make an informed decision.
The more claims you have, and the more they cost, the higher your premiums will be, and insurers will think about possible future claims as well as actual past claims. So these six tips are worth thinking about for every kind of insurance but are really important for liability policies, i.e. those which pay for claims brought against you by people who blame you for injuries or damage they have suffered.
• Claims-handling system - make sure you have one in place that will work for you, and that everyone involved knows what his or her part is: your insurers, any specialist claims-handlers, any solicitors you use, your staff and also yourself.
• Keep it moving - time really is money where legal costs are involved. Make sure claims do not get stuck on someone's desk. If you have not got the time, delegate this task.
• Learn the lessons - get feedback from insurers, investigators, or claims handlers as to the reasons they believe the accident happened and what they think could be done to prevent it happening again.
• Look ahead - think about all your activities and see where there are possible risks, even if nothing has gone wrong so far. You may find it worthwhile having someone else look at them with you, as it is very easy to miss the obvious when you see it every day.
• Balance the risks and costs - list options for controlling each risk and pick one or more which you think will work best for you, taking into account such things as the cost of the control measures and the possible cost of a claim and its effects on your business.
• Don't try to create a risk-free world. It can't be done and wouldn't be a good thing!
It is important that you spend some time thinking about each of the points in this article, and especially that you then act upon them, if you want to take at least some control of your insurance costs and not let them just seem to drop on you out of the sky.