Utah Contractor Practice Exam

What is the best way to reduce insurance costs without reducing risk?

1. Compare premiums and coverage yearly

2. Decrease the coverage

3. Increase the deductible

4. Get a policy for overlapping coverage

The correct answer is: Compare premiums and coverage yearly

The most effective way to reduce insurance costs without increasing risk is to compare premiums and coverage yearly. This approach allows contractors to review their current policy and explore alternative options from different insurers. By assessing various plans and their associated costs, one can identify better deals or policies that offer the same or improved coverage at a lower premium. Regularly comparing insurance options ensures that contractors remain informed about market rates and available coverage, which can change over time. This strategy can highlight potential savings while maintaining adequate coverage, keeping the risk level consistent. The more informed a contractor is about the evolving landscape of insurance, the better positioned they are to make decisions that balance cost and coverage effectively. Other options such as decreasing coverage or increasing the deductible may result in lower premiums but can also expose the contractor to greater risk, which is counterproductive. Opting for overlapping coverage also does not inherently lower costs, and in some cases, it may lead to unnecessary expenses without enhancing overall protection. Therefore, the best method to reduce insurance costs while maintaining adequate risk management is through diligent comparison of available coverage and premiums regularly.