Liquor bonds are generally affordable, but there is some variance in how much insurance companies charge for these bonds. If your business is purchasing a liquor bond, here are a few strategies that might help you reduce the rate that your business pays.
When Purchasing Liquor Bonds, How Can Businesses Save?
Increase Your Personal Credit Score
Many insurance companies consider business owners’ personal credit scores when setting premiums for liquor bonds. Generally speaking, higher scores are given reduced premiums when all other factors are kept the same.
Therefore, increasing your credit score as much as possible before purchasing a liquor bond may help your business get a lower rate. Even if there’s just a short while before your business needs a bond in place, paying down outstanding debts, avoiding new loans and making payments on time may all have an impact on your personal credit score in time. If you don’t manage to raise your credit score before purchasing a bond, you’ll likely have a year to work on it before your business needs to re-apply for a bond.
(Some states don’t let insurance companies check credit scores when selling products. An insurance agent who’s familiar with commercial insurance in your state will likely know whether insurance companies in the state are able to consider business owners’ personal credit scores.)
Improve Your Business’ Credit History
Insurance companies frequently also consider a business’ credit history, with businesses that have better histories generally receiving lower rates than those that have less-than-stellar histories.
Thus, improving your business’ credit history may have a positive effect on the business’ liquor bond rates. In addition to possibly saving your business money on a liquor bond, Paying down debts and making bill payments on time will also help put your business in a more solid financial position.
Find an Insurance Company That Doesn't’ Check Credit
While many insurance companies consider credit scores and histories when setting liquor bond rates, a few don’t follow this practice. Instead, they set rates without checking past credit.
If your personal or business credit is poor, an insurer that doesn’t check credit might have the most affordable option. An insurance agent who specializes in these bonds will likely know what companies don’t check credit, and they can help you compare those companies’ rates with the rates that companies which do check credit will charge your business.
Acquire More Industry Experience
Sometimes, how much industry experience business owners have also comes into play. Owners who have previously managed or owned businesses that had liquor licenses might qualify for a minor rate reduction.
Experience isn’t something you can manufacture, but make sure to mention any relevant experience that you do have. Additionally, note any experience that other partners might have. The insurance company may disregard the information, or you may receive a small rate reduction. There’s little risk involved in mentioning experience and asking.
Select the Right Effective Date
The effective date is the date on which your business’ liquor bond goes into effect. This should be set to the exact day you’ll first need the bond and not before. By making sure you have the right date selected, you’ll avoid paying premiums for days when your business doesn’t actually need a bond in place.
(The effective date also shouldn’t be set for a later date, as this will leave your business without a bond’s protection when the business needs the protection.)
Compare Liquor Bonds with an Independent Agent
Just as comparing insurance policies with an independent agent can help you save on insurance premiums, shopping for a liquor bond with an independent agent can likewise help you save on your business’ bond premium. Unlike a captive agent who only works with one insurer, an independent insurance agent can show you quotes from multiple insurance companies. With their help, you can easily see which company will charge your business the lowest rate based on the business’ specific factors.
To speak with an independent insurance agent who knows liquor bonds, contact World Insurance Associates. Our independent agents have the expertise necessary to help you find a suitable bond and help you get a great premium for it.