Take Coverage

Entrepreneur, Sept, 1999 by Robert McGarvey

So this is what Jones advises her clients: Buy as much as you can afford.

Too vague - and possibly self-serving? Sterling tells clients, "Insure against catastrophes, not small things." And make sure to carry the coverage you need to protect you against events - like flood, fire, product liability or sexual harassment suits - that could lead you into bankruptcy.

One tip Sterling offers is that you can raise the limits on your coverage without paying higher premiums by increasing your deductibles. Another tip: Avoid filing petty claims. "Get a reputation for doing that, and you may find insurance hard to buy," says Sterling, who adds that even if an insurer will take you on, there's no free lunch. "Rates go up as claims increase."

ANNUAL CHECK-UPS

Buying adequate insurance doesn't mean that your job is done. Sit down at least once a year with an insurance professional to review your coverage and how it fits your business - twice a year if you're growing rapidly, says Flannagan.

Why? As businesses grow, entrepreneurs rarely update their coverage - and that $100,000 in liability protection you bought five years ago just won't safeguard the $5 million business you have now. Discuss with a pro how your business has changed, and in an hour or two, you'll know what you ought to be doing to reflect your present reality.

Insurance professionals are eager to pepper us with long lists of common entrepreneurial errors when it comes to insurance - and there are many - but boil it down, and small-business owners' mistakes can be distilled into this: "Entrepreneurs confuse their personal insurance needs with their business insurance needs," says Brooks. The agent who sells you your homeowner's policy probably isn't right for handling your business's insurance. So find an agent who knows business, especially your line of business.

SITE-SEEING

Useful consumer-oriented insurance Web sites are plentiful, but ones aimed at providing business insurance tips and solutions are scarce. Some sites worth visiting are:

* Quicken InsureMarket/Small Business Insurance (www.insuremarket.com/products/small_business/index_sb.htm). Here you can find valuable info, especially on business owners' policies and workers' comp insurance.

* The Hartford Financial Services Group Inc. (www.thehartford.com/smallbiz/index.html). On its site, designed to sell policies, The Hartford offers info on what coverage is available and why you need it.

* Employers Reinsurance Corp. (www.ercgroup.com). A General Electric Co. subsidiary, Employers Reinsurance Corp. provides detailed information on the kinds of policies available to businesses in a style that makes for fast reading.

* Insurance Industry Internet Network (www.iiin.com). This site provides links to 900 insurance companies and 700 brokers/agents.

10 MISTAKES YOU DEFINITELY DON'T WANT TO MAKE

1. Carrying no coverage at all. Shocking as it sounds, that's what many entrepreneurs are doing.

2. Not obtaining commercial insurance on company cars. A classic case of penny-wise and pound-foolish.