Start Your Own Business (55 page)

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Another consideration is the size of the agency. The trend in insurance is consolidation. If you’re looking for a long-term relationship, you want to avoid an agency that is going to get bought out. One way to get a handle on whether the agency you are considering is a likely acquiree is by looking at the agency’s owner. If he or she is older and is not grooming a successor, there’s a chance the agency will get bought out.
Verify the level of claims service each agency provides. When a claim arises, you don’t want the agent telling you to call some toll-free number. If that’s his or her idea of claims service, keep looking. An agency that gets involved in the claims process and works with the adjuster can have a positive impact on your settlement, while an agency that doesn’t get involved tends to minimize your settlement.
You want an insurance agency that will stay on top of your coverage and be on the spot to adjust it as your business changes. Of course, it’s always difficult to separate promises from what happens after the sale is closed. However, you might ask would-be agents how often they will be in touch. Even for the most basic business situation, the agent should still meet with you at least twice a year. For more complex situations, the agent should call you monthly.
POLICY POINTERS
 
L
ooking for some of the best small-business insurance resources on the web? Check these out:
•
Safeware
(
safeware.com
). This company covers computers against damage, theft, power surges and other high-tech disasters.
•
Insurance Information Institute
(
iii.org
). This site puts business insurance news, facts and figures at your fingertips. Click on “Insurance Topics” for links to a plethora of business insurance information.
•
Cigna
(
cigna.com
). Despite its bent toward larger companies, this user-friendly site contains a slew of informative and entertaining insurance-related resources.
•
AllBusiness.com
(
allbusiness.com
). This general business site, which is affiliated with D&B, harbors a treasure trove of small-business insurance information. Just search for “Small Business Insurance” or the variation you’re interested in to find literally thousands of articles.
 
You also want to make sure the company your agent selects or represents is highly rated. While there are numerous rating agencies, the most respected is A.M. Best, which rates the financial strength of insurance companies from A++ to F, according to their ability to pay claims and their size. You can find their rating book,
Best Rating Guide
, at your local library or you can search Best’s ratings online at
ambest.com
. You will have to register with the site for access, but searching is free. Look for a carrier rated no lower than B+.
STAKING YOUR CLAIM
 
T
hough you hope it never happens, you may someday have to file an insurance claim. These tips should make it easier:
•
Report incidents immediately
. Notify your agent and carrier right away when anything happens—such as a fire, an accident or theft—that could result in a claim.
•
Take steps to protect your property from further damage
. Most policies cover the cost of temporary repairs to protect against further damage, such as fixing a window to prevent looting.
•
If possible, save damaged parts
. A claims adjuster may want to examine them after equipment repairs have been made.
•
Get at least two repair estimates
. Your claims adjuster can tell you what kind of documentation the insurance company wants for bids on repairs.
•
Provide complete documentation
. The insurance company needs proof of loss. Certain claims require additional evidence. For example, a claim for business interruption will need financial data showing income before and after.
•
Communicate with your agent and claims adjustor
. Though your claim is against the insurance company, your agent should be kept informed so he or she can help if needed.
 
Also make sure the agent you choose is licensed by the state. The best way to find out is by calling your state insurance department, listed in the telephone book. If you can’t find a number there, call the National Insurance Consumer helpline at (800) 942-4242.
Ask for references, and check them. This is the best way to predict how an agent will work with you.
Last but not least, trust your gut. Does the agent listen to you and incorporate your concerns into the insurance plan? Does he or she act as a partner or just a vendor? A vendor simply sells you insurance. Your goal is to find an agent who functions as a partner, helping you analyze risks and decide the best course of action. Of course, partnership is a two-way street. The more information you provide your agent, the more he or she can do for you.
 
SAVE
 
The IRS allows self-employed businesspeople to deduct 100 percent of health insurance premium costs. For more information on specific IRS guidelines, request IRS Publication 533,
Self-Employment Tax
, and IRS Publication 502,
Medical and Dental Expenses
, by calling (800) TAX-FORM, or visiting
irs.gov
, where you can download them instantly.
Insurance Costs
 
As with most other things, when it comes to insurance, you get what you pay for. Don’t pay to insure against minor losses, but don’t ignore real perils just because coverage carries hefty premiums.
You can lower your premiums with a higher deductible. Many agents recommend higher deductibles on property insurance and putting the money you save toward additional liability coverage.
How much can you afford for a deductible or uninsured risk? Look at your cash flow. If you can pay for a loss out of cash on hand, consider not insuring it.
You can also save money on insurance by obtaining it through a trade group or an association. Many associations offer insurance tailored to your industry needs—everything from disability and health to liability and property coverage. You can also help keep insurance costs down by practicing these good insurance habits:
•
Review your needs and coverage once a year.
If your circumstances or assets have changed, you may need to adjust your insurance coverage.
•
Ask your insurance agent for risk-reduction assistance.
He or she should be able to visit your premises and identify improvements that would create a safer facility.
•
Check out new insurance products.
Ask your agent to keep you up-to-date on new types of coverage you may want.
•
Take time to shop for the best, most appropriate coverage.
A few hours invested upfront can save thousands of dollars in premiums or claims down the road.
Business Insurance Planning Worksheet
 
 
Types of Insurance
Required (Yes/No)
Annual Cost
1.
Workers’ compensation insurance
2.
General liability insurance
3.
Automotive liability insurance
4.
Property/casualty insurance
5.
Product liability insurance
6.
Errors and omissions liability insurance
7.
Malpractice liability insurance
8.
Web-based business insurance
9.
Fire and theft insurance
10.
Business interruption insurance
11.
Overhead expense insurance
12.
Personal disability
13.
Key person insurance
14.
Shareholders’ or partners’ insurance
15.
Credit extension insurance
16.
Term life insurance
17.
Health insurance
18.
Directors’ and officers’ liability insurance
19.
Survivor-income life insurance
20.
Care, custody and control insurance
21.
Consequential losses insurance
22.
Boiler and machinery insurance
23.
Profit insurance
24.
Money and securities insurance
25.
Glass insurance
26.
Electronic equipment insurance
27.
Power interruption insurance
28.
Rain insurance
29.
Temperature damage insurance
30.
Transportation insurance
31.
Title insurance
32.
Water damage insurance
Total Annual Insurance Cost
$
 
 
 
chapter 23
 
STAFF SMARTS
 
Hiring Employees
 
 
 
 
 
T
o hire or not to hire? That is the question in the mind of the new entrepreneur. You see, hiring even one employee changes everything. Suddenly, you need payroll procedures, rules regarding hours, and a policy for vacation pay. You’re hit with a multitude of legal requirements and management duties you’d never have to deal with if you worked solo.
To decide whether you need employees, take a closer look at your ultimate goals. Do you want to create the next Starbucks, or do you simply want to work on your own terms without a boss looking over your shoulder? If your goals are modest, then adding a staff may not be the best solution for you.
If you do need employees, there are plenty of ways to meet your staffing needs—without driving yourself nuts. From temporaries and independent contractors to employee leasing, this chapter takes a closer look at the dos and don’ts of staffing your business. Read it over, and you will have a better idea whether hiring is the right solution for you.
 
e-FYI
 
Use the internet to help you find employees:
• Careerbuilder (career
builder.com
) offers advice, webinars, leadership development and hiring solutions to employers and job recruiters.
•
Monster.com
helps you screen resumes so you can find the right candidate quickly.

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