Insurance is a waste of money, you say? You may not need it all, but you sure need something.

By Robert McGarvey
Entrepreneur Magazine, October 1999

Buying insurance is no joy - it costs too much and the money could be put to better use building your business. Or so you think. Except, that is, when you have a loss, and insurance is there to keep your business humming.

If you have insurance in the first place. The surprising fact is, many entrepreneurs don't even carry the basics. A recent Entrepreneur subscriber survey indicated that only 55 percent of you believe you have "adequate" insurance for property damage, fire, theft or liability-the essentials.

That statistic comes as no surprise to insurance experts. "[Entrepreneurs] are much more interested in building wealth than in protecting against loss," says Beverly Brooks, partner of Dallas-based insurance agency Brooks Bittner. "It's often terribly difficult to get entrepreneurs to focus on risk."

Think you're too busy to think about insurance? We'll put it bluntly: If you're not adequately insured, you risk losing your business. Can you afford to fight a sexual harassment lawsuit when even a case without merit can cost you upwards of $50,000? Do you realize that if you send an employee out to pick up a pizza for the crew and he or she gets in an auto accident, your business is likely to get sued even if the vehicle isn't company-owned? "That happens frequently," affirms Cathy Jones, president of Integrated Risk Solutions, a risk-management and insurance consulting firm in Dallas.

Coverage against those risks would cost just a few pennies a day, but most entrepreneurs have scant coverage, haven't updated their insurance since they first opened their doors years ago, and don't know the new types of coverage designed to protect their businesses.

But updating your insurance won't necessarily break your budget. Add it up, and adequate coverage should cost a typical office firm 1 percent or less of its gross revenues, estimates Jeff Olmstead, a product manager specializing in small business with The Hartford Financial Service Group Inc., an insurance company in Hartford, Connecticut. What's more, he says, small businesses now have many new insurance products to choose from - and more insurers are competing for the market. Add to that the new efficiencies resulting from more widespread automation and you've got falling prices. The upshot: It's a good time to go shopping for small-business coverage.

This month's "Quick Guide" will clue you in to new types of insurance and help you determine whether the coverage you have is adequate.

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