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Year In Review

Why examining your deductibles may lead to significant deductions.

When's the last time you looked over your company's insurance policies? You should review your deductibles annually, advises Tricia O'Connor, CPA and president of Total Service Accounting, a Denver accounting firm that also provides business consulting.

O'Connor estimates that 95 percent of her clients aren't familiar with their insurance deductibles or don't know how they can affect the cost of their insurance policies until she shows them how they can save money by paying more attention. "Most clients never ask about deductibles and end up with whatever the agent thinks is appropriate," says O'Connor. "The trouble is, your agent isn't necessarily interested in saving you money on your premiums."

You can think of insurance as a disaster safety net, rather than a way to protect yourself from minor inconveniences, says O'Connor. For example, your auto insurance should be reserved for when a car in your fleet is totaled, not for when you lose a headlight in a parking lot accident. Health insurance should be used to protect you from the cost of catastrophic illnesses, not common colds. Be sure to adjust your deductibles accordingly.

Invest part of your premiums savings into an `insurance' fund that can cover deductibles from the in-terest it earns, and you'll save on premiums, incurring no added expenses from paying deductibles out-of-pocket.

Claire Tristram is a business and technology writer in San Jose, California.

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This article was originally published in the March 1999 print edition of Entrepreneur with the headline: Year In Review.

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