Picking the Appropriate Insurance Coverage

As a business owner, one of the most important decisions you will need to make, besides who will be your CPA, is choosing the right insurance coverage. Unfortunately, going into business for yourself is a risky venture. To hedge some of the risks associated with operating a business, it is necessary to carry insurance. There are thousands of different types of insurance policies covering everything from a fire to a customer slipping and falling on the sidewalk in front of your office. Understanding the various policies is a confusing task in itself, but here are some tips when looking for and deciding on what types of insurance you should carry.

• Finding an agent - Use the same criteria to find an agent as you would a new business partner, since that virtually is what they are. Always check the agent's credentials and experience. Ask for references - good agents will have a list available.
• Type of agent - There are two types of agents, Captive and Independent. Captive agents sell insurance products from one company, while Independent agents sell products from a variety of companies. Independent agents typically have an advantage over Captive agents because they can research different companies to find the best combination of price, service and coverage. Some insurance companies, however, ONLY sell through captive agents, so you may not be able to buy a particular company's plan unless you use its Captive agent.
• Research the company - Not only is it important to research the agent you are buying insurance from, but also the company. Check the company's reputation and claims history. You want to buy insurance from a company that will be around to pay your claims.
• Coverage every small business should have - Business Property and Commercial General Liability are two coverages every small business should have. Business Property normally offers coverage for equipment, furnishings, and computers if they are damaged by fire or power outages, or stolen. Commercial General Liability covers slip and fall claims. Employees -- even if they only work part time -- must be covered by workers' compensation insurance. In Colorado, you can call Pinnacol Assurance to obtain workers' compensation insurance. Also check with your agent to determine if you can obtain workers' comp more economically for a source other than Pinnacol.
• Deductibles - When purchasing your coverage, take into account the cost of your deductible. As a general rule, a lower deductible results in a higher premium. Determine the deductible amount by how much you can afford to pay out-of-pocket. Be careful not have your deductible so high that you cannot cover it should you incur a loss.