8 Ways Small and Midsize Businesses Can Save on Insurance

How to save money on business insurance? It’s one of the most common questions we hear from clients. To help you cut costs without cutting corners, we’ve put together a blog post with eight practical ways to reduce your insurance costs while still maintaining the coverage your business needs.

How much of my budget should go to insurance?

The answer to this question is: it depends. Each year, businesses incur various recurring expenses, such as insurance premiums, which on average range from 1 to 15% of a business’s total operating budget. Multiple factors, such as a company’s industry, location, size, exposures, history, regulatory requirements, geographic risks, and others, influence this percentage.

For example, a general contractor might allocate 10% of its total operating budget to insurance to cover workers’ compensation, general liability, builder’s risk, auto, and umbrella policies. In contrast, a graphic design agency may spend 1–2% on basic general liability and cyber coverage.

How can I reduce my insurance premiums?

It’s normal to want to save money on recurring business expenses, as long as you don’t compromise the safety and sustainability of your company. When it comes to saving money on insurance, consider the following strategies:

1. Bundle your policies. A business owner’s policy (BOP) is an excellent option for small- and midsize businesses. It combines multiple coverages, like general liability, property, and business interruption insurance, into a single policy. BOPs usually yield a lower premium than buying each coverage separately.
2. Level up your physical and cyber security. From alarms and surveillance cameras to antivirus software and firewalls, improving your security and theft-prevention measures may lead to cost savings.
3. Make safety a priority. Develop a strong safety program and safety manual, and implement ongoing safety training to reduce risks and prevent injuries. Doing so can help you maintain a strong safety record, which in turn can lead to lower premiums.
4. Work with a broker. Brokerages can shop among many carriers, comparing price and coverage options. They may also be able to negotiate better rates for you.
5. Maintain strong credit scores. A strong credit score is associated with a lower perceived risk, which can result in lower premiums.
6. Choose a higher deductible. Selecting a higher deductible can greatly reduce your premiums. Just be sure your company has the cash flow to cover a high out-of-pocket expense if needed.
7. Invest in best practices. For example, compliance tracking software and safety manuals show insurance underwriters your commitment to safety and compliance.
8. Classify your employees correctly. Each year, you should review your payroll and job classifications for accuracy. Proper classifications won’t save you money at the moment, but will help you prevent penalties down the road.

And always remember to ask! Ask your broker if they have any suggestions for ways you can save without compromising coverage. Working with a broker experienced in your industry can help you both find the right coverage and spot unnecessary coverage. 

Sources:

Small Business Insights – How Small Businesses Can Reduce Insurance Expenses | Zywave

OpenAI. (2025, July 16). What are ways to lower insurance premiums [Large language model]. ChatGPT (GPT-4). https://chat.openai.com/