When you talk to some business people about their liability insurance rates, their opinions are rarely complimentary.
Just ask Janice Fried, owner of Belle Paint & Hardware in Bolton Hill: "They're outrageous!" Ms. Fried says. "They only go up!"
If thinking back to your annual insurance tab raises your blood pressure a few notches, brace yourself. It's going to get worse, according to industry experts.
Insurance rates will increase, no doubt. The question is how soon.
"I think people expected an upturn this year," says Sean Mooney, senior vice president of the Insurance Information Institute, a New York-based trade association which represents property and casualty insurance carriers.
The new decade didn't bring noticeably higher rates, despite a sharp increase in claims following catastrophes such as last year's Hurricane Hugo and San Francisco earthquake. But some observers predict premiums may rise as early as January.
Admittedly, there's nothing more individualized than insurance coverage. It comes in as many varieties as there are businesses purchasing it. Still, in general, rates for liability insurance have flattened or shown only moderate increases for the past few years.
"I'm sure the small business guy doesn't think the insurance is cheap, but they are in a better position" than buyers of other types of insurance, says Charles Siegel, an associate commissioner in the insurance division of the Maryland Department of Licensing and Regulation.
That's because many of the independent insurance carriers plunged into the market for small and mid-size companies after well-heeled corporate heavyweights began self-insuring. The resulting competition for the small companies dampened premiums.
"Small businesses are getting their coverage at a price less than what sound business practices might dictate," contends Urban Leimkuhler Jr., senior vice president of commercial insurance at Baltimore's USF&G.
Not for long.
The weak market is bottoming out for the ever-cyclical insurance industry. Mr. Leimkuhler points to the poor financial results of many insurers as a hint that rates will probably rise soon.
Even during the so-called "soft" period, Don Kirson had trouble getting insurance for his company. The Kirson Medical Equipment Co., located in eastern Baltimore County, sells home-care equipment that ranges from wheelchairs and hospital beds to oxygen systems.
"Insurance companies think up the worst case scenario that has happened once, and they apply that ten hundred times," Mr. Kirson complains. After querying many carriers, Kirson's agent finally found an insurer to cover his company, but at more than $40,000 a year, he had to alter his budget to meet the payments.
When rates rise, Mr. Kirson may have to examine his books again. Because his business is very service-intense, "The only thing you can do is cut back some of the services you supply," Mr. Kirson says.
Shopping around for competitive rates is one way to find the best deal. Use an independent agent or broker with access to rates from several companies. That way, you're more likely to deal with a representative who has no obligation to sell a particular carrier's product.
Be careful that you're comparing apples to apples.
Shirley A. Duncan pays $3,000 a year for liability insurance at Park Hill Child Care Center in the Druid Hill area.
She could have been tempted to purchase coverage for half that cost, she says, if she had not thoroughly checked the fine print. "You might get it for $1500, but there are so many clauses that you may not be insured for everything," warns Ms. Duncan. "You must have clauses in your insurance that cover everything that could possibly happen."
Business owners should also ask their agents to investigate methods of classifying their companies, a subjective procedure that can determine liability costs. Agents "have the option of classifying a business -- maybe not as the owner views it -- but in a way to get better rates," says Richard M. Aarons, a small business counselor with the Baltimore County Chamber of Commerce.