Tips for Metalworkers to Manage Insurance Costs in 2023
Understanding trends can help protect your business as costs rise in an uncertain economy.
Posted: January 10, 2023
Fabricating and metalworking owners face new challenges every year. Today, that includes navigating high inflation rates and fluctuating supply chain costs. That can make it difficult to plan a budget and manage essential costs like insurance. However, adjusting certain coverages without understanding your options may lead to more financial risk rather than less.
The good news is you can assess your insurance needs for the current economic climate and still protect your business in the upcoming year. Let’s look at the trends affecting operations in 2023, and how you can stay one step ahead of risk by updating your policy.
Reassess Your Building and Property Values
One consequence of inflation and supply chain issues is an increase in building valuations. The building and property values you previously established — even as recently as one year ago — may no longer reflect current market conditions. Because of this, if your business suffers a catastrophic loss, such as a tornado or fire, you may not have enough coverage to help you rebuild facilities and restore equipment. Everything you need to replace could take longer and cost more — by some estimates 20% or more — than it would have just two years ago.
To help combat the increased costs from inflation, you can do two things:
Add an inflation guard provision to your policy: An inflation guard provision allows you to set a certain percentage of increase to your business’s property limits. It’s typically set in increments throughout the term of the policy.
Add or adjust existing business income coverage: Think of business income insurance as business disability insurance. If your business suffers a catastrophic loss, you’ll need to continue paying for overhead and employee wages — all while rebuilding and managing lost profits. These days, replacing machines and rebuilding facilities can take six-to-12 months longer than it did just two years ago, driving up the amount of potential income lost.
Talk with your insurer and review your current coverage to make sure your building valuations and property limits are current with today’s environment, and then make policy adjustments together accordingly.
Double Down on Safety
The potential cost to your business from injury, litigation, and medical costs has increased. Many accidents — and the financial risks that come with them—are preventable with a formal safety plan that can help you avoid loss and prevent injury to your most valuable asset — your employees. As a business owner, you can foster a safer work environment in several ways:
- Work with your insurer to develop a comprehensive safety plan
- Hold regular safety meetings
- Invite employees to take turns leading safety meetings, so they take ownership of the safety plan
- Conduct thorough assessments of motor vehicle reports prior to hiring
- Offer incentives for safety
- Encourage leaders to model safe behavior while working on the manufacturing floor or driving company vehicles
- Consider equipping company vehicles with telematics to help monitor safe driving habits
- Conduct regular cybersecurity checks
Balance your Premium and Deductible
Another way to reduce the percentage of overhead taken up by insurance is to increase your deductible, which can lower the upfront premiums you pay. Before you make that decision, you must have confidence in your safety policies, your employees, and be willing to work with your insurance company to mitigate losses. Metalworkers who are open to improving potential safety hazards in their business are the most successful at reducing their costs.
If you establish and follow a thorough safety plan, you can reduce risk across your business and increase your deductibles with confidence. That way you still gain the benefits of your insurer’s claims experts and safety resources, while lowering your initial costs. This can play a big role in controlling your long-term insurance program cost. Reach out to your insurance provider to determine the best approach for your business.
The Main Takeaway
Insurance works for you, not against you, even in the face of evolving challenges. You can work with your insurance provider to protect the health of your employees, combat the effects of inflation, and improve the safety of your company — all while managing the rising costs of doing business. As always, it’s best to talk with your local experts and insurer before adjusting your policy.
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