Cutting costs is important to any business owner, and unfortunately the first thing that seems to be reduced is general liability insurance. This is a mistake; it is more important to evaluate your risks over saving just a few dollars a month. However, you can save on insurance rates so you can grow your investments.

Commercial insurance for business owners is a must. A construction worker, painter, plumber, or any other small business owner or general contractor can be thrown to the wolves at the sight of one lawsuit, theft, or faulty workmanship. General liability insurance is the best preventative measure for retaining your livelihood. Contractors who fail to invest in business insurance do save money on a monthly basis, but they also risk everything they’ve ever worked for on a daily basis. Investing in insurance is not “flushing your money away”, but it is an investment into the preservation of your property, your trade, and your income.

Here are the three best ways to reduce costs to your commercial insurance without risking everything you’ve worked so hard to build for your future.



1. General Liability Insurance

General liability insurance (also called contractor’s liability) is legally required for general contractors and small business owners. This covers small accidents that might and will occur, such as a hired plumber under your supervision causing water damage to a property owner’s home or business property. There are additions to this insurance, such as blanket insurance coverage, which would extend to the property owner’s interests that you are contracted with. Cutting costs in this area is generally impossible, and should be avoided. Keeping this insurance up to date and with the proper limits of coverage will ultimately save a contractor or business owners a significant amount of money in the event of a large lawsuit or unavoidable mishap. One of the key ways to save money is to make sure that you are properly insured, and that you receive a quote for commercial insurance as quickly as possible, if you’ve not done so already.



2. Implement Better Hiring Practices

Cutting costs on insurance is more effective in other areas of business than actually reducing coverage, such as investing in employees that have had a longer tenure in their field. Ensuring that you are partaking in the best hiring policies is the most significant and effective way to reduce costs for insurance. Tenure holds much more significance in the contracting world than age.Workers with less than one year of tenure in a specific field have a much higher claims frequency than those who have more experience, regardless of age. Many contractors would hire a 35-year-old subcontractor with only one year of experience, rather than a 24-year-old with five years of experience. This is not the best business practice for cutting costs, and will definitely not help your business in the long run. Choose tenure over age, every time.

This is not to suggest that the small business owner should immediately hire someone based on their tenure. The most effective way to reduce insurance costs is to follow through on in-depth pre-hiring practices for each potential employee. Accidents and faulty workmanship can be avoided or significantly reduced by investing in pre-hire drug tests and background checks. It is much safer to hire these employees to work under your contracting business once you have confirmed that their drug screens and background checks are clear; they associate themselves with lower risks and you are protecting yourself and your livelihood. Behavioral assessments (such as cultural fit or authority-related behavior) and verification of employee credentials are also important aspects of the pre-employment process. The end result will lower insurance premiums due to safe hiring practices and lower rate of claims frequency, saving the small business owner upwards of thousands of dollars over the course of a lifetime.


3. Use this Hiring Checklist to Help You Get the Best Employees and Save on Your Insurance:

  • Candidate has great references and portfolio.
  • Candidate shows history of experience in relation to the project.
  • Candidate has cleared background and police checks.
  • Canadidate has proper licensing and training for the project.

There are multiple ways to cut your costs when purchasing commercial insurance for your general contracting business and finding an agent to help you will significantly reduce your chances of overspending. It is extremely important to use the correct and legally required safety measures, as well as preventative safety measures. There are multitudes of online resources to ensure that a business owner has access to the proper safety regulations, and these are usually available at your local city hall, as well. These safety measures can significantly reduce insurance costs by making you eligible for specific discounts for preventative measures that your agent might be privy to. An agent will also suggest paying your insurance premiums annually in full, rather than in monthly payments. This will cut out any monthly processing fees as well as reduce other fees associated with breaking up the payments. As always in the business world, it is imperative that small business owners and general contractor’s maintain good credit (excellent credit is even better). This will significantly lower your premiums, as it shows that you are a trustworthy customer and can be trusted to pay your bills. You can contact one of the agents at to get personalized tips to lower your Commercial Insurance Premiums!

Cutting costs for commercial insurance should not mean to dismiss insurance regulations entirely, or skimp on coverage. These are the worst mistakes that general contractors can make and it could affect them for the rest of their lives in the event of a lawsuit or faulty workmanship claim. There are agents available to discuss these essential pre-hiring practices and personal financial factors that affect insurance costs, and getting a quote as quickly as possible will ensure your protection and savings. Get a quote in 5 minutes or contact us today to ensure that your business is covered, and that your agent will keep your best interests in mind.

Written by: John Brown
John has more than 25 years of experience in the insurance industry. He grew from a star insurance producer to owning one of the largest agencies in the country; he's a reference regarding contractor's insurance, commercial insurance, and builders' risk insurance.