Stemming the Rising (Insurance) Tide
By Nina L. Kaufman, Esq

With the post-9/11 demise of some insurance companies and the refusal of others to insure New York businesses, insurance rates are definitely spiraling . . . often out of the control and the reach of the small business pocketbook. This has affected all forms of insurance including medical plans, workers' compensation, and general liability.

With politicians making political hay out of the fact that employees and businesses are underinsured, the question becomes how can small businesses provide themselves (and their employees) with a modicum of protection? Below are just a few steps that you can take to try to keep your insurance premiums in line:

• Don't go it alone. Approaching insurance companies as a single business will likely get you the least amount of service at the highest rates. By aligning yourself with an association, you can benefit from the reduced rates that their group volume negotiates. Look into plans through business groups and trade associations. And don't forget the potential benefits of professional employer organizations (PEOs), particularly when it comes to employee-related insurances.



• Consider a higher deductible. You may be able to save on insurance premiums by choosing a larger deductible. Yes, there's the risk that you may need to pay the deductible (so keep enough in reserve to cover it). But if your business is generally relatively claim-free, taking the gamble on the higher deductible could save you significant money. A good insurance broker can help you do a cost-benefit analysis to make sure that you are getting the most effective use from the money you spend.



• Prevent foreseeable problems. Pay attention to the nature and size of your insurance claims. Do they keep recurring in a particular subject area, such as on-the-job injuries? If so, look at how and where your employees perform their work so see how you can avoid the claims from arising in the first place.

Also, don't overlook the value of consulting with your tax advisors. You may be able to take advantage of certain tax deductions, depending on how you structure your benefit plans!

© 2004-2008 Ask The Business Lawyer LLC. Nina L. Kaufman, Esq., is a business attorney and the President of Ask The Business Lawyer LLC, which offers easy-to-understand business law resources that protect small businesses and save them money. To learn more, and receive our FREE "Words to the Wise" ezine, visit www.WiseCounselPress.com or contact Wise@AskTheBusinessLawyer.com. This article is for your general information only and is not intended to substitute for the specific advice of legal counsel.

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