Reviewing Insurance Policies Can Help Dealers Cut Costs

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In lean times like these, dealers need to evaluate their business and consider ways to reduce spending while boosting profits. The Insurance Information Institute (www.iii.org) believes many business owners don't take advantage of the ways they can make business insurance more affordable. According to the organization, there are eight ways a store owner can save money on business insurance:

1. Shop around. Prices vary from company to company. Get the names of companies or brokers who specialize in the powersports retail/service business. Call several so that you can compare prices and get a feel for the types of services they would provide. Ask the agent or company that provides your personal insurance whether it offers business insurance. Pick a company that is financially stable; check the financial health of your potential insurer with rating companies such as A.M. Best and Standard & Poor's.

2. Look at group rates. Purchasing your insurance through a business or professional organization (for example, your state dealer association) can save you money. Many different business organizations offer insurance plans and/or discounts on business insurance to their members. Generally, the bigger the group is, the lower the insurance premium. The savings typically outweigh any member dues. General business organizations, such as your local Chamber of Commerce and the Better Business Bureau also offer business insurance discounts. And your local home-based business association may offer lower prices on home-based business insurance.

3. Choose a higher deductible. The higher the deductible is, the less you will pay in premiums for the policy.

4. Consider a package policy. A Business Owners Policy (BOP) is often significantly less expensive than a self-designed plan. BOPs include: property insurance for buildings and company-owned contents; business interruption insurance, which covers the loss of income resulting from an insured event (such as a fire) that disrupts the operations of the business; and liability protection, which covers a company's legal responsibility for the harm it may cause to others. To determine whether a package policy suits your needs, inventory all of your business property to determine its value and whether it needs to be insured. Then, compare the property and values to what is available in a particular package.

5. Set up a risk management/loss reduction program. Insurers may lower your rates if you institute programs to minimize losses from fire, theft, and employee and customer injuries. These types of programs can include workplace safety training programs, disaster preparation and human resource intervention. Consider installing a security or fire system. Install anti-theft devices on your fleet vehicles and hire drivers with good driving records (reassign drivers with bad driving records to non-driving positions). Ask what you can do to reduce risks such as fire or work-related accidents and review the procedures that should be in place in the event your business suffers a major catastrophe.

6. Consider relocating your business. Although relocation is difficult (if not impossible) for a powersports dealer, it's still something to consider. Moving from a downtown area to a suburb, for example, may reduce premiums on your property and vehicle insurance, and even your worker's compensation insurance.

7. Work closely with your agent or broker. Keep your insurer informed about any changes in your business operations, including major purchases, expansions, hiring changes, or even in the nature of your operations.

8. Have the right amount and type of coverage. Part of the decision about what insurance to buy depends on the nature of your business. For example, if your business has a lot of assets, you might consider theft and property damage insurance. You may want life insurance on you and critical personnel in your organization. You also may want to consider various other forms of insurance for your directors and officers (if you have a board of directors) or for business interruption. Having the right amount and type of coverage along with a carefully developed business plan that includes disaster preparedness can save you money in the long run. Keep your agent apprised of any changes within your business that might necessitate changes to your insurance coverage. Such changes may include: adding employees, expanding your business, increasing your inventory or materials, purchasing major equipment such as tools or vehicles and adding suppliers.