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Protect Assets, Grow Business

Posted: May 3, 2011, 12:40 p.m., EDT

Retailers and experts reveal tips on business insurance.

The one business investment Houston-based Natural Pawz owner Biff Picone said he considers most critical is one he hopes never pays off.

“[Business insurance] is the single most important thing I do for my customers, employees and store,” he said. “I won’t risk my business to save a couple hundred bucks.”

“It’s the cost of doing business,” said Bob Negen, co-owner of WhizBang! Training, a retail consulting business. “If you don’t have it, you may lose everything.”

Protect All Assets
While experts and retailers alike agree business insurance is essential, getting it right—covering all aspects of business loss protection—represents a daunting task.

“There’s so much to it,” said Dan Rubenstein, owner of three Spot stores in Tribecca and Chelsea, N.Y., and the Newark, N.J. airport. He rattled off the basics: commercial liability, workers’ compensation, business risk insurance that covers loss against fire or theft, and general contents protection.

“The most important would be the premises,” said Tom McBride, a State Farm agent based in Kettering, Ohio. “That offers liability if someone gets hurt [on the property] and would come back to the owner.”

Controlling Costs
Although cutting corners on business insurance denotes a risky move, some ways to reduce business insurance costs include:

üShop around. Don’t be shy about inquiring with other agents and companies about available rates, even on a yearly basis. If you discover a better rate, bring that to the attention of your current agent.

üDepending on your current and projected cash flow, consider a higher deductible to save on monthly premiums.

üConsider working with an agent who represents multiple insurance providers.

üWhen you buy workers’ compensation insurance, get group rates through a company that represents multiple clients. Steve Grech, owner of Francis Kennels in Xenia, Ohio, watched his rates go from $3,000 per year to $300 per year when he joined such a group.

üAsk for a discount. If you’ve never needed to file a claim and are a long-time customer, some plans offer lower rates. --AB

Separate Coverage
McBride brought up one additional consideration: those pet retailers who own their own buildings should get building insurance coverage.

Since running a pet-related business includes specialty services such as daycare, grooming or boarding, additional riders need to be considered, said Steve Grech, owner of Francis Kennels, in Xenia, Ohio. Because Grech offers a crematory in a separate building, he must cover this, as well. To protect all these aspects of Francis Kennels’ services, his business insurance includes riders.

Spot shuttles dogs so its vehicles require coverage. Grech operates a Bobcat, which he also covers. Rubenstein found covering it all in one place isn’t possible.

“You can never find someone who can satisfy all your needs,” he said.

Annie Lalande, owner of Pet Toys & More in Timmins, Ontario, Canada, found her situation even more tricky as she operates out of her home raising and selling birds. Finding coverage wasn’t easy.

“I need both house and store coverage,” Lalande said. “Most places I contacted said they wouldn’t do it.”

She stated she did eventually discover a local company willing to cover her.

Animal Coverage
“Dogs are still considered property with the exception of California [which] has laws on the books that are being challenged,” Rubenstein said.

This fact means that, although business insurance should include dogs onsite, they fall under contents insurance coverage, and their worth is negligible. Grech said customers have the ability to sue for the replacement cost of a dog at death, even if that adds up to a mere $80 adoption fee.

Grech said his beloved 11-year old pug is worth nothing in the eyes of the law. He also said, as a business owner who treasures every customer, he realizes handling this potentially damaging loss would require more on his behalf than $80.

Similarly, Picone said workers’ compensation coverage is optional in Texas, yet, he added he wouldn’t do business without it for the sake of his employees.

Avoiding Insurance Pitfalls
Picone, who’s currently opening his seventh store, discovered complications with his latest lease; his new landlord asked for a higher level of coverage than his other property managers—two million dollars worth.

“Every landlord has different requirements,” Picone said. “You have to have multiple plans for multiple stores.”

Luckily, Picone knows he has negotiating power in this situation.

“I’m able to push back,” he said.

In many cases, McBride said, adding additional protection—even another million dollars worth of coverage—may not cost much more per year, so stores should carry out a cost/benefit analysis.

McBride also warned against settling for the cheapest rate.

“I try to instill in someone to not just on price but ask themselves, ‘What is the total value?’” He said.

Additional considerations include: a good working relationship with one’s agent, reputation and ranking of the company and ratings on satisfaction of claim service.

Negen’s personal philosophy consists of obtaining a high-deductible, low-cost plan.

“Insurance is a risk game,” he said. “They’re playing the odds just like you are.”

Choosing Insurance
˜If possible, consider choosing an agent that already represents retail stores, preferably other pet retailers.

˜Ask for references. Good agents offer current clients as references for potential customers.

˜Join your local Better Business Bureau (BBB), where you’ll find both advice and warnings about agents who’ve received complaints from their customers. Retailers who join BBBs may also obtain access to better workers’ compensation rates.

Common Sense Protection
“If you run your business correctly, you can take on more risk,” Negen said. “If you have good animal handling practices and you shovel ice in the winter, you can minimize your risk and [agree to a higher deductible].”

Each retailer has a different set of concerns and risks, which should be reflected in coveraege.

“My biggest worry is fire,” Grech said.

His groomers utilize dryers with no heat and his grooming facility stays at room temperature.

Grech also maintains pet health warranties onsite signed by his daycare customers indicating exactly how they want their pet’s injury handled.

Specific issues should also be taken into account. McBride said stores should at least consider ensuring coverage for errors and omissions to address employees giving bad advice to customers. He said this likely comes under professional liability coverage, although he said retailers should ask their agent where this falls.

Placing signage throughout one’s store warning against possible hazards—like kids climbing fixture—represents good business practice, Picone said store owners shouldn’t count on it to prevent law suits.

“If you go to court, a judge might say, ‘Great that you did that, but it doesn’t leave you off the hook,” Picone said. “You should have bolted them to the floor.’”


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