RISKS IN BUSINESS: Choosing the right commercial insurance coverage. (INSURANCE)

• Author: Barbour, Tracy
• Date: 01 February 2024

It's a no-brainer that all businesses need some type of insurance, but it is crucial for companies to choose coverage that not only fits their budget but offers ample protection against unforeseen risks and potential financial setbacks. Whether a company is a small startup or a large, well-established entity, understanding the intricacies of commercial insurance is essential for supporting long-term business success.

Every company is unigue and faces different risks, so a one-size-fits-all approach will not suffice. The first step is for the company to assess its specific situation and identify risk, according to Christopher Pobieglo, president of Business Insurance Associates in Anchorage. "Most business owners know what their risks are, but what we are talking about is formalizing the process of identifying risks. This will include looking at things like your contacts, leases, and site inspections," he says. "A lot of times, there are very unique risks that require specific coverage."

Often businesses allow their risk assessment decisions to be driven by what others dictate, such as coverage required to secure a contract, license, or lease. But external requirements should not be the primary determining factor. "The problem is that those people who are asking you to get insurance are worried about their interests, not yours," Pobieglo says. "While certain requirements are important, they shouldn't be the totality of making your insurance decisions."

There are a wide range of important aspects to consider when assessing risk and selecting coverage, including the industry, business size, location, assets, and legal requirements. There is a huge difference between running a roofing company and a coffee shop. Plus, many specialized carriers and programs are designed around certain business types. "A large Fortune 500 company will be able to get things out of their insurance program that 'Joe the plumber' can't," Pobieglo says. "In a perfect world, you want to insure everything, but you have to balance the cost versus the amount of coverage. Maybe you choose to self-insure some areas and manage risk around others."

Tracey Parrish, owner and operator of Alaska Pacific Insurance Agency, also cites risk assessment as the starting point for choosing the right commercial coverage. She emphasizes that owners should set aside long-term aspirations when assessing current risk. "I don't want to know their ten-year plan," says Parrish. "I want to know the...