Quick Guide To Insurance

Change Insurance As Your Business Changes

Buy 'em, forget 'em: That's the strategy many entrepreneurs apply to their insurance policies. It's only when disaster strikes that they realize their policies, like string bikinis, won't stretch to cover everything. So take some advice from the experts and make it a point to review your policy on a regular basis.

How much reviewing will you need to do? "Someone who's running a couple of shoe stores probably doesn't need to re-evaluate extensively more than every three to five years, because things don't change too much in that business," says David Golden, director of commercial insurance lines for the National Association of Independent Insurers.

On the other hand, if you run a business in a rapidly changing industry--like e-commerce--you should make it a priority to meet with your agent twice a year (or even quarterly when necessary) for a full review. "As your business grows, there will be gaps in coverage you don't think about. You might add new vehicles with the company logo and believe they're covered under your personal auto insurance policy, when they're not," says Hartwig.

Another example: Growing companies that are using contract workers may not appropriately classify them, meaning they won't be covered under their workers' compensation policies. Case in point: A home-builder who sends his employees out to do jobs on a commercial site might not have them appropriately covered under his current policy.

The bottom line: Even the smallest of changes within your business can result in a disastrous lack of coverage, so the best thing to do is to check in often with your agent.

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This article was originally published in the September 2000 print edition of Entrepreneur with the headline: Quick Guide To Insurance.

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