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For example, the difference between a $250 and a $500 deductible may be 10% in premium costs, and the difference between a $500 and $1,000 deductible may save you an additional 3% to 5%. Most businesses can afford to be out of pocket $500 or even $1,000 - especially if taking this risk means you pay significantly lower premiums.

Consider using money saved with a higher deductible to buy other types of insurance where it's really needed. For example, the amount you save by having a higher deductible might pay for business interruption coverage.

Compare

No two companies charge exactly the same rates; you may be able to save a significant amount by shopping around. But be wary of unusually low prices - it may be a sign of a shaky company. Or it may be that you're unfairly comparing policies that provide very different types of coverage.

Review your coverage and rates periodically. The insurance industry is cyclical, with alternating phases of low prices and high prices. When competition for insurance customer increases in a particular field, you really can achieve savings. But don't dump a loyal agent for a few cents. Ask your agent to look around and meet or come close to meeting the competition.

You can make the cyclical nature of the insurance industry work for you. If you're shopping for insurance during a time when prices are low, try locking in a low rate by signing up for a contract for three or more years.

Transfer Some Risks to Someone Else

Here are some possibilities:

* Indemnification by manufacturer. Suppose you run a store that sells exercise equipment, and primarily from one manufacturer. If you're buying a significant amount of equipment, the manufacturer may be will to provide insurance that indemnifies your business from any claim by a customer injured by the equipment.

* Leasing employees. Some businesses lease employees at least in part because the leasing company takes care of carrying workers' compensation and liability insurance on the employees (among other things). However, be cautious - the overall cost of leasing employees may be greater than if you hire directly. You may also be able to transfer some risks by simply engaging independent contractors to handle the more hazardous aspects of your business operations.

Look For the Most Comprehensive Package Available

Look for a small business package that includes a full range of coverage. This is often much cheaper than buying coverage piecemeal from several different companies. Group plans often offer these packages.

Seek Out Group Plans

Is there a trade association in your industry? If so, it may be a source of good insurance coverage. Trade associations often get good affordable insurance rates for the member because they have superior bargaining power.

Self-insure

Using this technique, you simply don't buy insurance and hope to maintain your own reserve fund to cover likely losses or liabilities. There are a couple of obvious disadvantages though. First, despite good intentions, most small businesses don't have enough funds to set aside this purpose. Second, unlike insurance premium, money put into a reserve fund isn't tax deductible until or unless you spend it.