Insurance is costing more -- often for less coverage -- because some insurance and reinsurance companies lack financial capacity. As a result, they restrict coverage or cancel policies.
What can you do about it? Here are some tips.
Many business owners hate buying insurance because they feel they can't control it. The answer is knowledge. Ask your agent for a coverage checklist spelling out what you need vs. what you have, and for a service timeline detailing what the agency does for you throughout the policy year.
Learn how premiums are calculated. Compare rates and the effects of deductibles, co-insurance and perils insured against. Premium bases for liability coverages vary. One company may use a multiple of sales. Others may use square footage, payroll or other factors. Knowledge empowers you to compare coverages intelligently.
A surprise increase at renewal time may indicate your insurance company doesn't want your business without a huge increase. Get quotes from other companies, but take into account any cancellation penalties that may apply. Your agent can guide you through the negotiable alternatives.
It is important that the insurance underwriter understands your business and sees a way to make money by accepting the risk you transfer. Ask to see the application your agent is submitting to insurance companies.
Customer service centers may work in your favor. It's possible to obtain a policy with one phone call, even if the company declined to give your agent a quote, because companies that write policies directly pay less commission to agents.
You must name a referring agency. For example, you could call an insurance company, mention an agency and describe your business to a licensed agent, who can offer you a policy.
Understanding how business insurance works and how you can manage it better affects bottom-line profits. How to reach: Steven M. Weiler is president of the Archer-Meek-Weiler Agency Inc. Reach him at (614) 221-3225 or www.archer-meek.com.