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By SCOTT SIMMONDS Friday, April 6, 2007

"I have full coverage, right?" It's a question insurance professionals hear all the time. The other side of the query comes at claim time, when the insurance company doesn't pay a loss the policy owner thinks should be covered: "What do you mean it's excluded? What do I buy insurance for?"

Insurance is a frustrating necessity for many business owners. Many don't know what questions to ask of their agents. I've often been told that insurance is right up there with taxes as the most exasperating part of business life.

Let's take some of the mystery away.

I learned early in my insurance career that the most important part of the insurance transaction is the relationship the buyer has with his agent. It's vital to have a trusted agent who looks out for you and the needs of your business. You must have confidence in your agent's knowledge and abilities.

You also must confide in your agent. He must know what's going on in your business. At least once a year, meet with your agent to review coverage and talk about the changes that have gone on in your business. Also, discuss your plans for the future.

Here are some questions to put to your insurance agent as you review your protection:

Let your agent tell you where the holes are in your coverage. Let him suggest enhancements and alternative policies. Probe to learn what exclusions are in your policies. There is no policy that covers all of your risks. Build an understanding of what's covered and what's not.

In the past, you might have opted not to buy certain coverage. Review those issues every year to be sure situations have not changed. Get quotes on changes in protection so you can make informed decisions.

Insurance works on the idea of supply and demand. The more in demand your business is to insurers, the better the price and coverage offers you will receive from insurers. Is your business attractive to insurance companies? Are there loss-control measures -- adding sprinklers and alarms, changing storage systems, changing employment policies, having diligence with safety and claims management -- that can be taken to improve your appeal? Are increased deductibles a valid approach? Should you drop collision coverage on older vehicles?

Work with your agent to identify risk-management tools that don't involve insurance. See whether you can contractually limit your risk (with your attorney's help) in leases and other business contracts.

Many insurance agents and carriers offer a variety of services. Loss-control services are widely available, for instance. Many insurers have safety classes, handbooks and videos geared to the needs of specific industries. If you don't ask, you might be missing out on valuable resources.

Is the agent considering other insurance companies for your coverage at the next renewal? Different insurers have different appetites. Some insurers prefer contractors and hate restaurants. Some like retail stores but not warehouse operations. Some are competitive on hotels as long as there is no swimming pool. Several insurance companies like manufacturers but hate apartment buildings.

Those appetites change over time. An insurer who was aggressive for hospitality business three years ago might not be now. Ask about how the current insurance marketplace affects your coverage and premium.

There also are questions you should have about your agent.

After an insurance buyer asks the above questions of his agent, there is sometimes concern that the current agent might not be the right fit. If the relationship between agent and buyer is the most important part of the transaction, how can you tell whether it's a good relationship?

As with any professional affiliation, comfort is a combination of trust, confidence and rapport. However, with insurance, there is one final test. It's simple and qualitative.

Close your eyes. Imagine that you're standing in front of what was your business. Imagine your building is a smoking hulk on the morning after a major fire. Ask yourself what person you want standing next to you on that morning. If the answer is not your current agent, start looking for a new agent.

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