Small Business Readjusting For Insurance Hikes

Financial advisors say while the rising cost of wind and hail insurance is a thorn in the side of many small businesses here on the coast, most aren't letting it hold them back.

Last week, the owner of Southern Community Adult Day Care in Ocean Springs told WLOX News about an insurance premium that had quadrupled from $4,000 to $16,000 a year. On Thursday, the director of the Gulf Coast Small Business Development Center spoke to us about what other businesses are doing to stay in the black.

These days looking lovely at Silhouettes Hair Studio in Waveland comes with a higher price tag. The owner says she's forced to pass on a 25 percent hike in wind insurance to her customers.

"It's caused us to have to go up on prices on our hair cuts and colors," said Cindy Bowen.

Bowen says insurance rates are also affecting her plans to open a cosmetology school. Her lowest quote is for $4,000 a month. That's 75 percent more than what she quoted before Katrina, and will mean higher tuition and a bigger financial burden on students.

Bowen said, "It's very important to get the education here for our students to be able to go to school and to be able to afford to go to school. So I'm looking forward to it and we want as many people to go as possible."

Teresa Speir of the Gulf Coast Small Business Development Center says many of her clients are dealing with insurance issues. She said, "It may mean they need to raise their prices on some things."

However, raising prices isn't the only way Speir says business owners are managing to survive.

"Some people starting a business are choosing to start that at home, so they don't then have a building and a facility that they have to insure. And that could affect the cost in some ways. Secondly, they're sitting down with their insurance agents and carefully saying, 'What's my coverage? What do I need? What's the minimum? What's the maximum?'"

Speir says even with all the challenges, most small business owners are pressing forward, which is exactly what Cindy Bowen plans to do.

"Because we have the need here for education, for small businesses and for people to expand their businesses and their lifestyles," said Bowen.

The Director of the Gulf Coast Small Business Development Center says some owners are also choosing not to fully insure.