By Mark Battersby

Insurance is generally recognized as a bureaucratic necessity, the dentist’s drill of all your annual cash outlays. That’s why most of you mobile entertainers wince every quarter when you write that premium check. But what if somebody told you there are some very simple things you can do to reduce your risk and minimize your outlay – without sacrificing your amount of protection?

You’d probably think that that somebody also had a bridge to sell you. But by taking action now, you can reduce your risk and watch your premiums wilt like a poinsettia in a darkroom. Here’s how.

Worker’s Comp: Granted, insurance talk is generally as exciting as watching moss grow and about as straightforward as a wily politician. But among the four major insurance categories – workers comp, general liability, auto/property/casualty and "umbrella" – workers compensation veers closest to the "no-brainer." The reason is simple: In all 50 states, every DJ operation with employees is required to carry workers’ compensation. In most cases, these rates leave little "wiggle" room.

However, working with fixed rates doesn’t mean you must accept them. First, by insuring that your DJ business is properly classified, you’ll be charged an appropriate rate. No one, for example, wishes to be categorized as an explosives manufacturer if, in reality, the closest you get to explosives are a confetti cannon and a pop gun.

You can further reduce your workers’ compensation cost by taking advantage of the rate variations offered by most states. After reaching a certain premium level ($5,000 in most states), you can get rated based on your claims history – not the rate for the DJing industry overall. In other words, the fewer the claims, the lower your workers’ compensation insurance premium will be.

General Liability: Before you even consider marketing toward a banquet facility, you must have at least $1 million in general liability insurance. This insurance, which protects your business when an accident occurs either in your office or on-site, is your protection when drunk Uncle Hank gets tangled in your wires during a wedding and is seriously injured. If liability insurance is required in order for you to perform, there is usually little you can do to avoid an insurance bill.

For those of you who avoid venues that demand a fixed amount of liability insurance, there is still a way to reduce your general liability cost. First, determine how much coverage you actually need. The old rule stated that you should buy general liability insurance equal to your business’ net worth. Unfortunately this method is no longer adequate. In today’s hyper-litigious society, people routinely sue not only for the entire amount of your insurance policy, but for your operation’s net worth, too. Ouch.

As a result, two extremes can be considered when figuring the amount of insurance you should buy. The first is the "empty pocket" approach. To avoid becoming a target of lawsuits, buy only a minimal amount of insurance – or none at all. The reasoning behind this has much to do with a basic tenet of human nature: People are more likely to sue you if they know it will be worth their while. You can’t draw wine from a rock.

The other approach is to belly up to the bar and buy $2 million to $3 million of liability insurance – probably more than you will ever need. This might seem like you’re setting yourself up unnecessarily as a target for a lawsuit, but most judges award small, realistic amounts to plaintiffs.

But the most prudent approach is to estimate what your DJ operation could be sued for. Have there been any court settlements in your area? That’s a good indication. But despite the most publicized of court cases, rarely do you see an award in excess of $1 million.

Auto Insurance: Auto insurance offers a tremendous potential for savings. You only need to increase the amount of your deductible. By assuming the risk of the first $1,000, $5,000 or even $10,000 of needed repairs, liability or damage, your premiums can shrink faster than a sweater in an industrial-strength dryer.

Sound like a good deal? It is – but only if your DJ operation remains relatively accident-free. If your vehicles are in top shape and you select your drivers carefully, then why not assume some of the risk? It will be worthwhile. And for additional savings, remove the collision and comprehensive coverage from your older vehicles.

Remember, auto insurance covers more than just employees driving your vehicle – be it owned or leased. It also covers independent contractors or other non-employees who are driving your vehicles. By limiting those who are permitted to drive your vehicles, auto insurance costs can also be kept down.

Property/Casualty Coverage: Most property insurance is issued on what is referred to as an "all-risks" basis. This is opposed to the "named peril" basis, which covers specific perils – an airplane crashing into the venue, ballroom chandeliers being jarred from the ceiling by your loud music – that are spelled out in the policy. If damage occurs through some other, unnamed peril, then unfortunately you’re a paddle short of getting away unscathed.

You should have "all-risks" coverage. Go the extra step and review the policy’s exclusions – something that few DJs bother to do. All policies cover loss by fire, but what about such crises as hailstorms and explosions?

You should also purchase replacement-cost insurance. This insurance, which replaces your equipment at today’s prices, regardless of the original purchase price, offers protection from inflation and guarantees that your lost equipment will not incur a further expense to you.

Risk Management: The best way to reduce your cost of insurance is through risk management, a procedure that minimizes the effect of financial loss by (1) identifying the sources of loss, (2) measuring the financial consequences of that loss, and (3) using controls to minimize the loss.

How Much Does Your Risk Cost?: A cost-of-risk survey, conducted by Tillinghast-Towers Perrin, a New York-based consulting company and the Risk & Insurance Management Society (RIMS), showed that, for the second consecutive year, there was a significant drop in risk management costs.

Between 1997 and 1998, the average cost of risk for American companies dropped five-percent, to $7.30 per $1,000 of revenue. Responsible for this welcome decline were double-digit decreases in the cost of workers’ comp and liability insurance – two of the largest risk expenses.

This figure will continue to decrease through the increased use of initiatives, such as safety programs and managed care, less reliance on traditional insurance and the further impact of legislative reform.

Liability costs tend to fluctuate, reflecting litigation trends and insurance pricing. Today, however, many DJs routinely hire legal counsel and negotiate for lower insurance rates wherever possible. Some DJs are also settling nuisance lawsuits faster in order to avoid protracted expensive litigation.

Loss-control services are offered by many insurance companies and brokers. These services can include everything from fire-safety programs to reducing employees’ exposure to injury. After all, the best way to minimize insurance premiums over the long haul is to minimize claims. And, the best way to do that is through loss-control services.

Reduced Risk = Reduced Insurance Costs: Your insurance rates are based on risk, or the potential loss the insurance company will assume if they take you on. Therefore, you should take steps to lower these risks, which will not only safeguard your business but will lower your insurance rates.

Every DJ should consider

these basic insurance

cost-cutting steps:

* Keep electrical wiring, cords and the like in good repair.

* Keep good records of inventory and equipment purchases. Keep a second set of records off-site, with your accountant, insurance agent or at home.

* Make sure your employees have good driving records.

* Make sure your employees know how to lift properly ("At the knees, dammit!") and use all necessary safety equipment.

Venue operators and promoters should consider these

cost-cutting steps:

* Maintain adequate lighting throughout the business premises.

* Install a sprinkler system, smoke and fire alarms and adequate security devices.

* Keep electrical wiring, stairways, carpeting, flooring, elevators and escalators in good repair.

* Keep only a small amount of cash in the cash register.

And, every DJ and other

business owner, regardless

of size, should:

* Consider using the services of a risk manager. These outside consultants can advise any DJ business, large or small, about safety or environmental regulations that may have been overlooked as well as talk to employees about safety practices.

* And finally, as mentioned, many DJ businesses may want to raise their deductible. How high should any DJ raise the deductible is a question that is generally governed by how much the DJ operation can afford to pay out of pocket. Be careful not to raise it so high that you cannot cover it should a loss occur.

Slashing insurance costs usually begins with shopping for competitive rates for the insurance coverages your DJ operation needs and can afford. Going even further to actively manage the DJ operation’s exposure to risk will slash those insurance costs even further.

The alternative is no insurance and possible ruin when disaster strikes.