Business insurance: risk management requirement.

• Author: Stomierowski, Peg
• Position: INSURANCE

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In a prolonged recession, with companies still laying people off and the best of employees, irregardless of raises or promotions, praying to hang onto their jobs, insurance managers warn that liability claims tend to rise, and it's a bad time for businesses to be lax or unprotected.

Thirty-five percent of private companies in the United States have been hit with employment practices claims in the last five years, according to promotions sponsored by Business Insurance Associates in Anchorage. Employers lose 70 percent of court cases, the firm reports, and the average compensatory damage award for claims in 2007 exceeded $625,000.

BUSINESS INSURANCE

Yet many small business owners, Business Insurance Associates managers said, fail to insure for these and other risks. Like their employees, they may feel that what's happening all around them won't happen to them.

With some 20,000 agents licensed to write insurance in Alaska, and a limited pooling of providers, owners should interview a few brokers or agents for someone they feel they can trust, then seek quotes for types of coverage, said Angela M. Pobieglo of Business Insurance Associates. The most common--and essential--is commercial general liability insurance.

Insuring a business is essential to protecting one's assets, say Angela and husband Christopher L. Pobieglo. Owners who lack insurance may figure they don't have that much to lose if they declare bankruptcy and walk away. But they could lose everything in court, the Pobieglos say--if for no reason other than having to defend themselves. Even fighting the most frivolous lawsuit, they observed, can be expensive and result in lost time and morale.

The agency works mainly with contractors, architects and surveyors, commercial property owners, restaurants, nonprofits and retail stores, and their client list is no accident. Restaurants and contractors tend to fail at a higher rate than most businesses, they said, and those businesses' workers' compensation rates alone can be astronomical..

Besides, Angela said, some fabulous food artisans may not be good at running the business side of a dining establishment, even in good times. Others may not be good at networking and behind-the-scenes roles, and may not know whom to call for help when they need it. Lack of this kind of business acumen, she said, is one of the primary reasons why businesses fail.

For small home-based businesses, the Pobieglos recommend consulting...