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Today, very few businesses or individuals have sufficient cash or financial reserves to protect themselves against the hundreds of property and liability exposures that most businesses face. What those exposures are, what their dollar value is and how much protection is enough are thorny questions. When you add the need for an employee benefits program or the need to protect the business when its ownership or management changes, the picture becomes increasingly complex. That is why an insurance agent is so important in helping you cover all the bases.

Typically, the independent agent is a small business owner-manager. Insurance companies are represented by agents who receive a commission for selling the companies' products and services. An agent may represent more than one insurance company.

The professional independent insurance agent has been trained in risk analysis. He or she is familiar with the insurance coverages and financial strategies available in your state and with the regulations that govern them. With this expertise, the agent can point out exposures you may overlook. He or she can suggest options from a vast menu of risk-management strategies and amend a basic policy by adding special coverages and endorsements. The resulting policy will be custom tailored to your business's unique protection needs.

Your agent can also recommend noninsurance strategies to meet your needs. Where appropriate, he or she will suggest that your accountant and attorney be brought into the decision-making process to review the legal and tax implications of suggested strategies.

Other Services Insurers Provide

You may not be aware of other services that insurance companies provide to policyholders:

  • Legal defense -- Liability insurance (particularly for property damage and bodily injury) usually includes legal defense at no additional charge when the policyholder is a party to a lawsuit that involves a claim covered by the policy. Litigation is costly, whether the claimant's suit is valid or ridiculous. The legal defense provision greatly reduces those costs to the policyholder.
  • Rehabilitation -- Insurance companies that write a lot of workers' compensation insurance may provide access to extensive rehabilitation services. Generally, these services help return injured workers to employment and, in some cases, may even help train the workers for a different job.
  • Inspection services -- Many cities require businesses to conduct regular inspections of the steam boilers in commercial buildings. Boiler and machinery insurance policies not only protect against certain kinds of damages to energy equipment, but also provide for inspection by the insurance company's specialists. The insurance company issues a certificate of inspection to the policyholder as proof that the inspection requirement has been met.
  • Loss control services -- Some commercial insurance policyholders may also qualify for consulting services of the insuring company's loss control (or engineering) department. This department is staffed with engineers and safety experts who specialize in inspecting business premises, identifying hazards, perils and possible trouble spots and recommending possible solutions.
  • Claim management services -- Some commercial insurers provide claim management services that support the policyholder in loss analysis.


In addition to helping you identify, minimize and, in some instances, eliminate business risks, the checklist in Appendix A will help you strengthen your insurance program and will provide guidelines for discussions you should have with an insurance agent.

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This article is reprinted by permission of the SBA and The Travelers, Hartford, Connecticut.
For more information on SBA programs go to www.sba.gov


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