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Ups & Downs

Get your insurance rates on the same track as the economy.

This story appears in the February 2002 issue of Entrepreneur. Subscribe »

It's a double-whammy: As you struggle with the economic slowdown, insurance rates are climbing. "We predict commercial rates will go up between 10 and 30 percent [this year]," says Carolyn Gorman, vice president of the Insurance Information Institute. Now's a good time to review your coverage and employ strategies to get the best rates. Gorman offers the following tips:

  • If you own your building and have replacement cost coverage, consider changing to actual cash value. If the building is relatively new, you could save on premiums without significantly impacting claim payout.
  • If you've reduced the inventory you carry, consider adjusting the limits on your property policy.
  • If you have a standard business owners' policy or a package policy, review extras you may have bought years ago but no longer need.
  • Business interruption policies are typically rated based on revenues and expenses. If those figures have changed, you may be able to reduce your premiums.
  • Carefully consider all your specialty coverages. You may find the benefit of increased cash flow outweighs certain risks during tough times. Your survival is important to your insurance agent.

Gorman recommends talking candidly with your agent to come up with a plan you can afford and that will still protect your operation.

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