Insurance a critical component of operating a business: affordable packages available, just consult with an agent.

• Author: Barbour, Tracy
• Position: INSURANCE

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Commercial insurance is an essential part of operating any business because it offers protection against a variety of threats. For small businesses, in particular, insurance can be a literal lifesaver that enables them to safeguard their limited assets against hazards that can have fatal effect on their operations.

Randy Pugh, president and CEO of Alaska USA Insurance Brokers, has seen many small-business owners spend time researching locations, advertising, accounting and legal advice for their companies--all of which are very important. Yet, in reality, he says, an uninsured loss or buying too much insurance can damage a businesses' cash flow more negatively than any other decision they make. "For example, buying workers' compensation coverage and making sure you buy the correct coverages, using the correct state classifications and keeping up actual monthly premiums can make or break a small-business profit margins at year-end," says Pugh, a 30-year insurance industry veteran based in Anchorage.

Many small businesses owners think of insurance in terms of protection against physical asset losses, Pugh says. However, insurance also provides protection against risks associated with employees, the public, customers and other risks. Liability insurance, for instance, will pay legal bills for the insured in the event of a lawsuit. "The lack of 'legal hazard' coverage may jeopardize the continued operation of the business and threaten the owner's financial well-being," he adds.

STATE REQUIREMENTS

There are myriad types of commercial insurance available for small businesses. The kind of insurance required will depend on state laws, the type of business and industry, and the individual needs of the business, according to Muriel Longlet, who oversees the small-business division of Alaska USA Insurance Brokers. The most common types of commercial insurance are property, liability and workers' compensation. In addition, many businesses offer life, health and disability insurance to their employees.

In Alaska, state law requires any business with employees to carry some type of workers' compensation insurance, Longlet says. Workers' compensation insurance provides coverage for an employee's on-the-job injuries. It pays benefits to injured workers to cover medical care, part of lost wages and permanent disability. In return, employers receive immunity from civil lawsuits by employees over their work-related injuries.

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