Insurance premiums bite a big chunk out of building service contractors’ bottom lines. Yet BSCs must have coverage for general liability, workers compensation, automobiles and property. Otherwise they’re opening their businesses to a lawsuits or having to pay for an injured individual’s medical costs, both of which could bankrupt their companies.

Without the proper coverage, BSCs pay if someone slips on a freshly cleaned floor, one of their employees accidently leaves an office unlocked and a theft occurs, or any number of scenarios that put their companies at risk every day.

Ultimately an underwriter at the insurance company decides the premium contractors will pay for the needed insurance. According to the Bureau of Labor Statistics, insurance underwriters choose whether to provide insurance and under what terms. They use actuarial data to determine the likelihood and magnitude of a claim and evaluate insurance applications to establish coverage amounts and premiums. Not only do they evaluate the insurance risk when first signing on, but also when it comes time to renew the policy.

Although much of the data used to decide on an insurance premium is out of a contractor’s control — such as the length of time the contractor has been in business, which lowers premiums — some is not. BSCs can change some of their operations to reduce their premiums. Here are 10 steps to improve the workplace that will also help lower insurance premiums.

1. Perform Criminal Background Checks

Confirming a potential employee’s record, or lack there of, falls under best practices and should always be done, says John Marley, vice president of Moody Insurance Worldwide, Denver.

“You want to do what’s prudent to protect your clients and customers,” says Marley.

If someone has previously embezzled, was convicted of violence in the workplace or committed any number of other crimes, BSCs will want to know before they hire him or her. Contractors can even request background checks on employees on the current payroll that for whatever reason weren’t checked when hired.

2. Screen For Drugs

BSCs should let their insurance agents know if their company does pre-hire, post-hire and random drug testing, says Marley. It will make the insurance company more comfortable.

Employees who operate heavy machinery or influence the safety of others need to be drug-free. The National Council on Alcoholism and Drug Dependence Inc. estimates that drug abuse costs employers $81 billion a year. Being under the influence can lead to sleeping on the job, theft and poor decision-making.

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Lower Premiums Through Workplace Safety, Janitor Training