Insurance costs on your profit and loss (P&L) statement can be significant and surprisingly volatile. Shop regularly to defend yourself against paying too much, and against shocking price hikes. Of course, shopping may result in reducing your insurance costs, which directly improves your bottom line profits. But you may not recognize your vulnerability to an insurance marketplace that can change quickly, resulting in painful premium increases or lack of coverage availability. Defensively, handle your insurance to guard yourself against the decisions and actions of companies and agencies. Remember, these firms focus on maximizing their profit, not yours.



Develop solid alternatives before a crisis comes, so you are ready to change course any time. Pricing for contractor insurance is unstable, and it is possible to overpay double or more, compared to the best possible price. It is amazing how widely different prices are quoted from the same set of quote specifications sent through different channels. Often, it is hard to believe that the quoting insurance companies are all looking at the same account. Such broad swings in pricing may be unique to the commercial insurance marketplace.

Shopping your account helps you increase the odds of being insured if a loss occurs. Just like getting a second opinion from a doctor, having several competent agents look over your exposures and recommend coverages can prove worthwhile. Most coverage packages can be improved, and a second agent hoping to win your account may be more alert and innovative with coverage suggestions. For example, a few changes in coverage may take you closer to your objectives in how you spend your premium dollars. Many businesses are purchasing coverages for exposures they could easily handle without insurance, while being exposed to hazards that could ruin them.

As you accumulate alternative quotes, you gain valuable negotiating power. With multiple quotes in hand, you have the power to change agents, and select the agency you want to handle your account. If you are renewing your policy, you can tell your current agent you have a more competitive quote. Watch as the agency scrambles to find new ways to lower its current quote and offer you new and improved services. If the agency does not try to get you a lower quote or better service, maybe it is time you change agencies anyway. Since you have the necessary alternate quotes, you can do so quickly and conveniently. Having concrete alternatives puts you in the driver's seat when the time comes to negotiate your renewal. Most businesses should regularly shop their insurance for many valuable reasons. Even when you are getting excellent service, it pays to have your agency's work regularly inspected by other agencies. You can remain satisfied with your favorite agent, while you maintain a focus on your competitive position. For instance, you may make a tough decision to save money by purchasing your insurance this year from your agent's competitor. At least when the time arrives, your former agent may be motivated to do everything possible to win you back.