Business insurance without tears.

• Author: Campbell, Diana

Some business people think of insurance as a safety net; others see it as legalized gambling. Like it or not, insurance is necessary. Here are a few tips on how to keep your rates down and get the most for your money.

At age 30, Jay Ramras is enjoying the success of his three restaurants in Fairbanks after 10 years of hard work and plenty of lumps.

People flock by the hundreds every day to savor a menu that features cheese steaks and spicy chicken wings, washing it all down with free soda refills or one of the many microbrew beers in stock.

His restaurants are sparkling new and attractively decorated, each operated by a happy staff.

The boyish-looking entrepreneur carefully applies his hard-earned business acumen and runs his business with efficiency.

Yet one thing mars his bright horizon: the dreaded insurance tab.

"I pay over $100,000 (a year) in premiums," Ramras says. "Where's the rewards for being a good risk?"

Necessary Evil?

Many business people grumble about their insurance bill, some even calling it legalized gambling and extortion. It is a necessary evil with few redeeming qualities, they say. But laying out insurance money is part of doing business and allows risk taking, insurance agents and brokers contend.

"It allows them to exchange a known liability, which is the premium, for an unknown liability, such as injury to the public," says Dennis Brown, president of Alaska Independent Insurance Agents and Brokers.

Ramras laughs at such a notion. It's not that he has an extreme record of claims on his insurance; his overall yearly losses are about $5,000, he maintains. The $100,000 is how much Ramras' coverage costs him for his category of business, the food service industry. His insurance includes general liability, property, worker's compensation and auto insurance; pretty basic stuff for the small-business owner.

And while the figure represents about 2.5 percent of his overall receipts of about $4 million, it is still too much of his operating budget, he argues. Because of the insurance practice of grouping businesses into categories, his business is judged compared to other restaurants. So he has to pay the premium for what insurance companies estimate the payout risk to be in his type of business and what kind of work his employees do.

"We are a statistical loser," he says. "The rewards for an excellent record do not sufficiently reduce premiums."

Killer Lawsuits

The reason for such high premiums is because of the litigious...