12 ways to cut your insurance costs
By Pat Curry • Bankrate.com

As with any purchase, it pays to shop around for insurance.

The Internet makes it easy to compare rates. You also should call your state insurance commissioner's office to find the average rate increase for your industry. That way, you'll know if your premium increase is in line with what similar businesses across the state are paying.

And choose an insurance agent the way you do an attorney or an accountant. Ask colleagues for a recommendation, check references and make sure you get an agent who's thinking about your business goals and needs instead of his commission.

Once you've done your research and found an agent, it's time to work on your policy specifics. Here are 12 ways to cut your costs:

1. Bundle up. Talk to your agent about bundling different kinds of insurance, such as property and auto coverage, with the same insurer. A discount often is available to customers who do this.

2. Bring in a safety consultant. About 25 percent of business owners already do this annually to see if they comply with state and federal regulations. The certificate issued by the consultant may get you a better rate.

3. Increase your deductible. Some kinds of insurance, such as property and auto, are closely tied to the deductible.

4. Re-evaluate your range of services. Your liability coverage is based on the full range of services you offer. If one aspect of your business is considered high risk, all your insurance goes up, even if the riskier aspect is a very small part of the service you offer. By dropping that service, you might cut your insurance costs considerably.

5. Join an association. Individual policies are the most expensive because the risk rests solely on you. Join a chamber of commerce or a professional association that offers access to group insurance. Or join others in your industry or community to get insurance as a group.

6. Transfer risk. This is similar to avoiding high-risk activities. If there's an aspect of your business in which the risk can be transferred to the customer, you'll lower your costs. An example would be a contractor who removes asbestos during building renovations. "You would be better served to go to the owner and say, 'You take out the liability for asbestos removal,'" says Scott Hauge, owner of CAL Insurance Associates in San Francisco. "There may be functions that have a higher liability that you can pass on to others."

7. Define workers' roles and work spaces. Hauge explains this consideration with an example: You have a bakery. One person runs the cash register and helps customers; three people are bakers. Those are two different classes for workers comp, with the register worker in a lower-risk category. If there's nothing dividing the kitchen from the store's retail section, or if your sales person goes into the kitchen to get orders for customers, he's classified at the bakers' rates. A simple installation of a pass-through window would allow the sales person and bakers to communicate -- and lower insurance costs.

8. Buy American. If you buy merchandise from an overseas supplier or manufacturer, that makes you the manufacturer in the eyes of insurers and "the first line of defense" in litigation, Hauge says. You'll lower your premium if you buy from a U.S. supplier.

9. Add yourself to a supplier's policy. If you work with suppliers or subcontractors where certificates of insurance are required for jobs, have them to add you as an additional insured on their liability policy.

10. Check out the building before you sign a lease. You'll save money on your property insurance if your business is in a newer building with an automatic sprinkler system. Similarly, you're affected by who else is in the building, such as a restaurant where fires are more likely. Ask your insurance agent to get the rating on the building.

11. Price your auto insurance components separately. There's not much savings on comprehensive coverage by taking a higher deductible, but you save can money on the collision portion that way. Price them separately. You might be able to drop the medical payments portion for a company car that's only used by employees. You probably already have medical coverage with your workers comp.

12. Pay your own way. Many commercial leases have what's called a "mutual waiver of subrogation." This means that you won't go to the landlord's insurance company to pay for damage to the portion of the building you're renting. He does the same. An example: A pipe breaks, your insurance pays you for damage to your inventory and equipment and the owner's policy covers damage to the building. You both save some money.

Pat Curry is a contributing editor based in Georgia.

-- Posted: April 24, 2002