U.S. Small Business Administration MP-28

**SMALL BUSINESS INSURANCE & RISK**

**MANAGEMENT GUIDE**

by Susan Anastasio, The Travelers, Hartford, Connecticut

*Management Planning Series*

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*Small Business Insurance and Risk Management Guide*

replaces *Small Business Risk Management Guide*

The material in this publication may not be reproduced or transmitted in
any form or by any means \-- electronic, mechanical, photocopying,
recording, or other, without written permission of the U.S. Small
Business Administration.

*All SBA programs and services are extended to the public on a
nondiscriminatory basis.*

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**TABLE OF CONTENTS**

**INTRODUCTION 1**

**RISK AND THE SMALL BUSINESS 1**

**WHAT IS RISK MANAGEMENT? 1**

**EXPOSURES TO LOSS**

Property Losses 2

Business Interruption Losses 3

Liability Losses 3

Key Person Losses 4

**SMALL GROUP BENEFITS 5**

**LOSS EXPOSURES AND RISK MANAGEMENT**

Limiting Exposure to Loss 5

The Role of the Insurance Professional 6

**INSURANCE CHECKLIST FOR SMALL BUSINESSES 7**

**ORGANIZING YOUR INSURANCE PROGRAM**

Recognize the Risks 7

Study Insurance Costs 7

Have a Risk Management Plan 7

Get Professional Advice 7

**SUMMARY 8**

**APPENDIXES**

A. Checklist for Insurance Needs 9

B. Glossary of Insurance Terms 17

C. Information Resources 21

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**INTRODUCTION**

This guide should heighten your awareness of business insurance and
encourage you to consider carefully the various insurance programs and
options available on the market. Adequate insurance coverage is
imperative for a firm to be successful.

In addition to helping you identify, minimize and, in some instances,
eliminate business risks, this publication includes a checklist
(Appendix A) to help you strengthen your insurance program and provides
guidelines for discussions you should have with a qualified insurance
professional. Appendix B is a glossary of terms you will encounter in
selecting insurance for your business.

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**RISK AND THE SMALL BUSINESS**

Is your business a risky business? You bet! Every small business is.
Just think for a minute about the hundreds of things that most business
owners worry about. A few are predictable or, at the very least, are
items that you can plan for and perhaps even control to a certain
extent, such as

 Expected sales volume.

 Salary costs.

 Taxes.

 Overhead.

 Equipment and supply costs.

 The price you charge for the goods or services you offer to your
customers.

Others are unpredictable and largely beyond your control, such as

 Actions your competitors take.

 Changing tastes and trends.

 The effect these actions and changes have on your market and your
customers.

 The local economy and its impact on your customer base (plant closings
or unemployment, for example).

Still other events can directly affect your day-to-day operations,
reduce profits and result in unexpected financial losses serious enough
to cripple or even bankrupt your business. You\'ve probably already
considered the most obvious risks, such as fire or injury, and have
bought insurance to protect against them. But there are hundreds of
other losses and liabilities that every small business faces, many of
which are overlooked or ignored.

Large corporations often employ a full-time risk manager to identify and
analyze possible exposures to loss or liability. The risk manager takes
steps to protect the firm against accidental and preventable loss and to
minimize the financial consequences of unpreventable or unavoidable
losses. But most small businesses can\'t afford the services of a risk
manager, even part time, so the business owner often has to take on that
responsibility.

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**WHAT IS RISK MANAGEMENT?**

Risk management consists of

1\. Identifying and analyzing the events that may cause loss.

2\. Choosing the best way to deal with each of these potentials for
loss.

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**EXPOSURES TO LOSS**

Identifying exposures is a vital first step to risk management; until
you know the scope of all possible losses, you won\'t be able to develop
a realistic, cost-effective strategy for dealing with them.

It is not easy to recognize the hundreds of hazards or perils that can
lead to an unexpected loss. For example, unless you\'ve experienced a
fire, you may not realize how extensive fire losses can be. Damage to
the building and its contents are obvious, but you should also consider

 Smoke and water damage.

 Damage to employees\' personal property and to others\' property
(e.g., data-processing equipment you lease or customers\' property left
with you for inspection or repair) left on the premises.

 The amount of business you\'ll lose during the time it takes to return
your business to normal.

 The potential permanent loss of customers to competitors.

Begin the process of identifying exposures by taking a close look at
each of your business operations and asking yourself what could cause a
loss. If there are dozens of exposures you may find dozens of answers.

For each exposure you identify, ask yourself how serious is that loss.
This question focuses on the possible severity of each exposure, e.g.,
what would that loss cost? The purpose here is not to determine the
source of replacement or repair funds, but the full cost of the loss.

Many business owners use a risk analysis questionnaire or survey,
available from insurance agents, as a checklist. Agents can also help
analyze your situation; with their expertise and experience, you\'re
less likely to overlook any exposures.

In general, most questionnaires and surveys address the potential for

 Property losses.

 Business interruption losses.

 Liability losses.

 Key person losses.

 Automobile losses.

 Injury to employees.

**Property Losses**

Property losses stem from one of the following:

 Physical damage to property.

 Loss of use of property.

 Criminal activity.

Physical Damage

Property damage can be caused by many common perils, such as fire,
windstorm, lightning and vandalism. To cope effectively with the
possibility of physical damage to property, the business owner should
consider more than just damage to or destruction of a building. Contents
may be even more susceptible. Manufacturers might lose raw materials and
finished goods, and merchants, valuable inventories and fixtures. Any
business might lose valuable accounting records, making it difficult to
bill or collect from customers. Vital machinery or equipment may become
inoperable, and, if replacements can\'t be found and installed
immediately, the business may even be forced to temporarily shut down.
(There is a detailed discussion of business interruption later in this
booklet.)

Loss of Use

You can lose the use of your business property for reasons other than
physical damage. A government agency can close a manufacturer for
violating health and safety regulations. The local health department can
close a restaurant because of unsanitary conditions. These are normally
uninsurable losses unless caused by an insured peril, e.g., smoke. A
gas-main break or a downed utility line may shut down an entire block
for a day or more.

Criminal Activity

Small businesses may also be susceptible to crimes. Burglary and robbery
are obvious perils, but so are employee theft, embezzlement and forgery.
Merchants, in particular, may need protection against losses caused by
forged checks or unauthorized use of credit cards.

Obviously, the property loss exposures a bank faces are different from
those that a painting contractor, a delicatessen or a bookstore faces.
An experienced insurance agent is familiar with the exposures of many
different businesses. Just as you rely on an accountant to guide you
through the maze of tax regulations and record-keeping requirements, you
can rely on an experienced insurance professional to help you identify
the exposures to loss that your business may face.

Business Interruption Losses

You have already seen how a direct loss from fire can shut down a
business temporarily. Although insurance provides money for repairing or
rebuilding property damaged as a direct result of fire, most policies do
not cover indirect losses, such as income that is lost while the
business is interrupted for repairs.

A special kind of insurance covers indirect losses that occur when a
direct loss (that results from a covered peril, such as fire) forces a
temporary interruption of business. Business interruption insurance
reimburses policyholders for the difference between normal income and
the income earned during the enforced shutdown period. Not only is
income reduced or cut off completely during such interruptions, but many
business expenses continue, such as taxes, loan payments, salaries to
key employees, interest, depreciation and utilities. Without income to
pay these expenses, the business is forced to dip into reserves.

Interruptions in business also often trigger extra expenses. For
example, overtime may be authorized to speed the business toward full
operation again, or it may reopen with a skeleton staff (additional
payroll) in temporary quarters (additional rent) using leased furniture
and equipment (additional overhead). These expenses put an added strain
on finances at a time when little if any income is being produced.

A firm can also buy business interruption insurance to protect against
interruptions triggered by direct loss on someone else\'s property. For
example, if a key supplier is shut down by a fire and can\'t deliver
critical raw materials to a manufacturer, the manufacturer\'s business
may be seriously interrupted. Property damage at a key customer\'s
business may have the same effect. If you depend on one firm for most of
your volume and that firm is forced to suspend purchasing, you will lose
income.

Every year hundreds of businesses that carry adequate insurance against
direct property losses fail because they are not insured for indirect
losses. Don\'t forget to protect your business against loss of income
and unusual expenses that may result if indirect loss forces you to
close temporarily.

**Liability Losses**

Every business also faces exposure to liability losses. A business may
become legally liable (i.e., responsible for payment) for bodily injury
suffered by another person or persons,

or for damage to or destruction of the property of others. This
liability may be the result of

 A court decision (as in a lawsuit charging negligence).

 Statutory provisions (such as a state\'s workers\' compensation law).

 Violation of contract provisions (a contract that makes one party
responsible for certain kinds of losses).

**Public Liability**

A business may be held liable for injuries or other losses suffered by a
member of the general public as the result of the firm\'s (or its
employees\') negligence or fault. Examples include

 A customer in a firm\'s building trips on a broken step.

 A defective product causes injury to its user.

 Improper installation of a product causes injury to a customer.

 A tenant is held responsible for a third-party injury occurring on the
rented property, due to a clause he or she signed agreeing to such
responsibility.

Your daily paper will provide dozens of other examples. A firm that is
found legally liable for harming a third party must pay damages to
compensate the injured party. Sometimes the court also imposes punitive
damages and, in cases involving violation of statutes designed to
protect the community, the court may levy fines in order to discourage
future violations.

Regardless of who wins or loses a law suit, litigation is time consuming
and expensive. No matter how ridiculous or unfounded the suit may be,
productive business hours are lost, lawyers must be retained and paid
and other related costs must be met while the suit is being contested.

Liability to Employees

Every state has enacted workers\' compensation laws. These laws require
most employers to compensate employees for loss of income or medical
expenses resulting from work-related disease or injury (except for
certain self-inflicted injuries). Should an employee die as a result of
a job-related accident or disease, the employee\'s family also collects
a specified amount.

Although workers\' compensation laws in some states do not apply to all
kinds of businesses, a successful private lawsuit may require a normally
exempt firm to compensate employees for losses resulting from
work-related injury or disease.

So far, the exposures we have looked at have all been more or less
external to the business. There are, however, several major exposures
that have to do with the business itself.

**Key Person Losses**

What would happen to your business if an accident or illness makes it
impossible for you to work? What if one of your partners or your sales
manager suddenly died? Most of us would rather not think about such a
what if, but it is important for you to prepare your business for
survival long before a key person dies or is disabled.

Serious Illness or Disabled Owner

 What will the owner\'s source of income be? How will it be treated for
tax purposes?

 Who will continue the business? What if that person is not qualified
or is a minor?

Death of an Owner

 If a will is not in place before the owner\'s death, will the business
close or will someone inherit it?

 If the owner\'s life savings are invested in the business, will the
surviving family be able to use them wisely?

 What will be the surviving family\'s source of income while the future
of the business is being decided? If the business is to be sold, where
will working capital come from for the transition period? How will the
fair market value of the business be determined? Will the fair market
value change because of the loss of a key person?

 If the business forms the bulk of the estate, what are the income and
inheritance tax implications for the surviving spouse and heirs?

 Is there some predeath strategy that could minimize that tax
liability?

The answers to these questions can best be determined with the help of
your business\'s planning team: your attorney, accountant and insurance
agent. Their expertise in estate planning, financial planning, and
current legal and tax codes will help you develop a plan for your
business\'s survival.

Death of a Partner

Unless the partners have prepared some other binding arrangement, a
partnership is dissolved when one partner dies. The duties of the
surviving partner(s) are limited to winding up the affairs of the
partnership. Also, the surviving partner(s) will be personally liable
for losses that the business\'s assets are insufficient to cover.

Partners may set up agreements for the surviving partner(s) to purchase
the deceased partner\'s interest at a prearranged valuation. Business
life insurance on each partner can provide the funds needed to purchase
that interest.

 Who should pay the premium? The business? Each partner?

 What are the pros and cons of these alternatives?

 What are the tax implications of each?

 How would each affect the firm\'s cash flow?

There are many plans and many ways to set up the necessary insurance.
Your planning team can suggest a wide range of options compatible with
your needs, your firm\'s cash position and local and federal tax
implications.

Death of a Major Stockholder

In most small incorporated businesses, there are only a few
stockholders, and most of them take an active part in running the
business.

Death of a major stockholder often throws a spotlight on the survivors\'
differences. Conflict or major personality clashes can seriously
threaten the survival of a firm. Dissension also damages employee
morale, can lead to a loss of business and may even harm the firm\'s
credit rating.

Unless otherwise provided for, the deceased major stockholder\'s shares
will become part of his or her estate. While the estate is being
settled, the estate administrator can vote in the deceased
stockholder\'s place. If a controlling interest in the firm is involved,
the administrator can name a new board of directors and take over full
control of the corporation.

 What if the heirs decide to get involved in the business? If they
decide to retain the stock, will it provide enough income to support
them?

 If the heirs decide to sell the stock, will the other major
stockholders have the right of first refusal? Can a plan be set up to
allow the surviving stockholders to finance a buyout of the heirs\'
holdings? Without such a plan, will the remaining stockholders\' search
for buyout funds have any impact on the firm\'s credit?

Once again, planning is essential. Your attorney, accountant and
insurance agent can develop a legally binding strategy to prevent
outsiders from unexpectedly coming into the business and to ensure an
orderly changing of the guard should a major stockholder die.

Loss of a Key Person

What would happen if you were to suddenly lose the services of a key
person (e.g., a sales manager or the office manager/bookkeeper) because
of illness, disability or death?

 What impact will that person\'s absence have on sales volume? Costs?
Productivity? Efficiency? The firm\'s credit?

 How will you reassign duties to cover the missing person\'s functions?

 What extra costs will you have to incur to recruit a replacement?

 How long will it take before the replacement is trained and
productive?

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**SMALL GROUP BENEFITS**

We\'ve already touched briefly on some legally required employee
benefits:

 Social Security.

 Workers\' compensation.

 Unemployment insurance.

 Temporary disability benefits.

Most firms recognize that employees expect basic benefits in addition to
those listed above. As an employer, you compete for the most qualified
individuals in the local labor pool. Unless you offer at least minimal
benefits, attracting and keeping qualified employees may be very
difficult.

You may want to consider offering one or more of the following benefits:

 Pensions.

 Group health protection, either as a traditional group plan or in the
health maintenance organization format. Health benefits may include life
insurance; medical, dental and vision care; prescription drugs and major
medical expenses.

 Other group insurance benefits (life, travel, accidental death and
dismemberment, personal, auto and homeowners\').

Some plans offer medical self-care and health-promotion programs to
encourage employees in healthy lifestyles. Because increased awareness
of general health care and preventive medicine fosters greater
productivity, reduces absenteeism and increases morale, an employer\'s
insurance costs can be significantly reduced.

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**LOSS EXPOSURES AND RISK MANAGEMENT**

As you can see, a business may face several types of risks and
exposures. Once exposures have been identified and analyzed, and
employee benefits have been reviewed, you must decide upon the risk
management measures that will best protect your business. The next two
steps in this process are similar to those we face in managing our
personal finances.

1\. Loss control \-- What can be done to prevent or limit exposure?

2\. Guaranteeing availability of funds \-- What techniques can be used
to ensure that funds will be available for unavoidable losses?

**Limiting Exposure to Loss**

Avoiding Risks

One principle of loss prevention and control is the same in business as
it is in personal life: avoid activities that are too hazardous. For
example, a merchant may decide not to sell a particular product because
it is likely to injure customers; thus, the firm avoids a
product-liability exposure.

Or if you can\'t avoid an exposure completely, minimize it.

An apartment owner may decide against constructing a new building on a
rural hillside site that has a long history of brushfires. Instead, he
builds on level, suburban land, which is supplied by town water and is
two minutes from a fire station. Although exposure of loss from fire can
seldom be eliminated completely, this owner has reduced the possible
severity of loss by choosing a safer site.

Look again to see if the extent of possible loss can be further reduced.

That same apartment owner, for example, may decide to build using
fire-resistant construction and materials, thereby reducing the chance
of a fire\'s spreading. He may also decide to install smoke detectors,
fire alarms and automatic sprinkler systems throughout the building.

Risk Retention

A business owner may decide that the firm can afford to absorb some
losses, either because the frequency and probability of those losses are
low or because the dollar value of the losses is manageable.

For example, a firm owns several business vehicles. The drivers have an
excellent safety record, and exposure to collision is low because these
vans cover uncongested rural routes. These are older vehicles, and their
book value has decreased substantially. The firm decides to drop the
collision coverage completely. If an accident damages one or more of the
vans, the firm will pay for damages with company funds. In effect, the
firm has decided to retain the risk itself rather than transfer the risk
to an insurance company by paying for collision insurance. An alternate
is that the firm could decide to retain only part of the risk and insure
the rest.

Transferring Risk

Another method of managing exposure to loss is by transferring the risk.
Although most businesses do this by buying insurance (which transfers
some or all of the risk to the insurance company), there are
noninsurance options.

 In the above example, the firm may decide to eliminate the collision
exposure completely by selling the firm\'s vans and hiring a local
delivery service. This solution eliminates not only the collision
exposure, but also the exposures associated with owning and maintaining
the vans. In effect, the firm has transferred all of the expenses to the
local delivery service.

 To reduce exposure to property damage, a retailer may decide to cut
in-store inventories and to handle certain items on a special-order
basis only. The owner will place small reorders with suppliers more
frequently. The result? Lower inventory values in the store, therefore,
lower exposure. The retailer is actually transferring much of the
exposure of property loss to the suppliers.

Insurance as a Risk Strategy

The most common method of transferring risk is insurance. By insuring
your home and car, you have transferred much of the risk of loss to the
company that issued the policy. You pay a relatively small amount in
premium rather than run the risk of not protecting yourself against the
possibility of a much larger financial loss.

In business insurance, as in personal insurance, only you can decide
which exposures you absolutely must insure against. Some decisions,
however, are already made for you:

 Those required by law (such as workers\' compensation).

 Those that others require. For example, you cannot register or operate
a business vehicle in most locations unless you can prove that it is
insured. Similarly, few lenders will finance property acquisition or
construction unless it is adequately insured and the lender is named on
the policy as having an insurable interest.

**The Role of the Insurance Professional**

Today, very few businesses or individuals have sufficient cash or
financial reserves to protect themselves against the hundreds of
property and liability exposures that most businesses face. What those
exposures are, what their dollar value is and how much protection is
enough are thorny questions. When you add the need for an employee
benefits program or the need to protect the business when its ownership
or management changes, the picture becomes increasingly complex. That is
why an insurance agent is so important in helping you cover all the
bases.

Typically, the independent agent is a small business owner-manager.
Insurance companies are represented by agents who receive a commission
for selling the companies\' products and services. An agent may
represent more than one insurance company.

The professional independent insurance agent has been trained in risk
analysis. He or she is familiar with the insurance coverages and
financial strategies available in your state and with the regulations
that govern them. With this expertise, the agent can point out exposures
you may overlook. He or she can suggest options from a vast menu of
risk-management strategies and amend a basic policy by adding special
coverages and endorsements. The resulting policy will be custom tailored
to your business\'s unique protection needs.

Your agent can also recommend noninsurance strategies to meet your
needs. Where appropriate, he or she will suggest that your accountant
and attorney be brought into the decision-making process to review the
legal and tax implications of suggested strategies.

Other Services Insurers Provide

You may not be aware of other services that insurance companies provide
to policyholders:

 *Legal defense* \-- Liability insurance (particularly for property
damage and bodily injury) usually includes legal defense at no
additional charge when the policyholder is a party to a lawsuit that
involves a claim covered by the policy. Litigation is costly, whether
the claimant\'s suit is valid or ridiculous. The legal defense provision
greatly reduces those costs to the policyholder.

 *Rehabilitation* \-- Insurance companies that write a lot of workers\'
compensation insurance may provide access to extensive rehabilitation
services. Generally, these services help return injured workers to
employment and, in some cases, may even help train the workers for a
different job.

 *Inspection services* \-- Many cities require businesses to conduct
regular inspections of the steam boilers in commercial buildings. Boiler
and machinery insurance policies not only protect against certain kinds
of damages to energy equipment, but also provide for inspection by the
insurance company\'s specialists. The insurance company issues a
certificate of inspection to the policyholder as proof that the
inspection requirement has been met.

 *Loss control services* \-- Some commercial insurance policyholders
may also qualify for consulting services of the insuring company\'s loss
control (or engineering) department. This department is staffed with
engineers and safety experts who specialize in inspecting business
premises, identifying hazards, perils and possible trouble spots and
recommending possible solutions.

 *Claim management services* \-- Some commercial insurers provide claim
management services that support the policyholder in loss analysis.

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**INSURANCE CHECKLIST FOR SMALL BUSINESSES**

In addition to helping you identify, minimize and, in some instances,
eliminate business risks, the checklist in Appendix A will help you
strengthen your insurance program and will provide guidelines for
discussions you should have with an insurance agent.

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**ORGANIZING YOUR INSURANCE PROGRAM**

Good risk and insurance management is achieved through organization and
planning. A lifetime of work and dreams can be lost in a few minutes if
your insurance program does not include certain elements. To ensure you
are adequately covered, take these steps:

1\. Recognize the various ways you can suffer loss.

2\. Follow the guides for buying insurance economically.

3\. Organize your insurance management program.

4\. Get professional advice.

**Recognize the Risks**

The first step toward good protection is to recognize the risks you
face. Some businesses will need coverages not mentioned in the
checklist. For example, if you use costly professional tools or
equipment in your business, you may need special insurance covering loss
or damage to the equipment or business interruption resulting from not
being able to use the equipment.

**Study Insurance Costs**

Before you purchase insurance, investigate the methods by which you can
reduce the costs of your coverage. Be sure to cover the following
points:

1\. Decide what perils to insure against and how much loss you might
suffer from each.

2\. Cover your largest loss exposure first.

3\. Use as high a deductible as you can afford.

4\. Avoid duplication of insurance.

5\. Buy in as large a unit as possible. Many of the package policies are
suitable for the types of small businesses they are designed to serve
and often are the only way a small business can get adequate protection.

6\. Review your insurance program periodically to ensure that your
coverage is adequate and your premiums are as low as possible yet
consistent with sound protection.

**Have a Risk Management Plan**

To manage your insurance program for good coverage at the lowest
possible cost, you will need a definite plan that undergirds the
objectives of your business. Here are some suggestions for good risk and
insurance management:

1\. Write down a clear statement of what you expect insurance to do for
your firm.

2\. Select only one agent to handle your insurance. Having more than one
may complicate and weaken responsibility.

3\. If an employer or partner is going to be responsible for your
insurance program, be sure he or she understands the responsibility.

4\. Do everything possible to prevent losses and to keep those that do
occur as low as possible.

5\. Don\'t withhold important information about your business and its
exposure to loss from your insurance agent. Treat your agent as a
professional helper.

6\. Don\'t try to save money by underinsuring or by not covering some
perils that could cause loss, even though you think the probability of
that loss\'s occurring is very small. If it is small, the premiums also
will be small.

7\. Keep losses better coverage at lower costs in the future.

8\. Have your property appraised periodically by independent appraisers.
This informs you of your exposures, and allows you to prove more
conclusively what your actual losses are if any occur.

**Get Professional Advice**

Insurance is a complex and detailed subject. A qualified agent, broker
or consultant can explain the options, recommend the right coverage and
help you avoid financial loss.

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**SUMMARY**

Some small business owners look on insurance as if it were a sort of
tax. They recognize it as necessary but consider it a burdensome expense
that should be kept at a minimum. Is this view justified? Not if you
take a more conservative approach. Used correctly, insurance can
contribute a great deal to your success by reducing the uncertainties
under which you operate. It can reduce employee turnover, improve your
credit rating at the bank, make it easier to sell customers on favorable
terms and help your business continue in case an insured peril
interrupts operations. The potential benefits of good insurance
management make it well worth your study and attention.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**APPENDIX A: CHECKLIST FOR INSURANCE NEEDS**

The points covered in this checklist are grouped under three general
classes of insurance: (1) coverages that are essential fr most
businesses, (2) coverages that are desirable for many firms but not
absolutely necessary and (3) coverages for employee benefits. Study your
insurance policies with regard to the following statements and discuss
questions you may have with your agent.

**Essential Coverages**

Four kinds of insurance are essential: fire, liability, automobile and
workers\' compensation. In some areas and in some kinds of business,
crime insurance, discussed under Desirable Coverages, is also essential.

Are you certain that the following points have been given full
consideration in your insurance program?

No Look

action into

needed this

Fire Insurance

1\. You can add other perils \-- such as windstorm hail smoke

explosion vandalism and malicious mischief \-- to your basic

fire insurance for a relatively small fee. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. If you need comprehensive coverage your best buy may be one

of the special cause of loss contracts that offers the

broadest available protection for the money. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

3\. You may buy coverage that will indemnify you i.e. compensate

you for your losses in one of several ways: (a) it may pay

actual cash value of the property at the time of loss (b) it may

repair or replace the property with material of like kind and

quality or (c) it may take all property at the agreed-upon or

appraised value and reimburse you for your loss. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

4\. You can insure property you don\'t own. You must have an

insurable interest \-- a financial interest \-- in the property

when a loss occurs but not necessarily at the time the insurance

contract is made. For instance a repair shop or dry cleaning

plant may carry insurance on customers\' property in the shop or

you may hold a mortgage on a building and insure that building

although you don\'t completely own it. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. When you sell property you cannot assign the insurance policy

along with the property unless you have permission from the

insurance company. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

6\. Even if you have several policies on your property you can

still collect only the amount of your actual loss. All the

insurers share the payment proportionately. Suppose for

example that you are carrying two policies one for \$20,000 and

one for \$30,000 on a \$40,000 building and fire causes damage

to the building amounting to \$12,000. The \$20,000 policy will

pay \$4,800 or

20,000 divided by 50,000 or 2/5 of \$12,000, and

the \$30,000 policy will pay \$7,200 or

30,000 divided by 50,000 or 3/5 of \$12,000 \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

7\. Special protection other than the standard fire insurance policy

is needed to cover the loss by fire of accounts bills currency

deeds and evidence of debt money and securities. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

8\. If an insured building is vacant or unoccupied you must notify

your insurance carrier promptly. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

9\. If either before or after a loss you conceal or misrepresent to

the insurer any material fact or circumstance concerning your

insurance or the interest of the insured the policy may be

voided. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

10\. If you increase the hazard of fire the insurance company may

suspend your coverage even for losses not originating from the

increased hazard. (An example of such a hazard might be

renting part of your building to a dry cleaning plant.) \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

11\. After a loss you must use all reasonable means to protect the

property from further loss or run the risk of having your

coverage canceled. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

12\. To recover your loss you must furnish within 60 days (unless

an extension is granted by the insurance company) a complete

inventory of the damaged destroyed and undamaged property

showing in detail quantities costs actual cash value and amount

of loss claimed. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

13\. If you and the insurer disagree on the amount of loss the

question may be resolved through special appraisal procedures

provided for in the fire insurance policy. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

14\. You may cancel your policy without notice at any time and have

part of the premium returned. The insurance company also may

cancel at any time with proper notice to you. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

15\. By accepting a coinsurance clause in your policy you receive a

reduction in premiums. A coinsurance clause states that you must

carry insurance equal to 80 or 90 percent of the value of the

insured property. If you carry less than this you cannot collect

the full amount of your loss even if the loss is small. What

percentage of your loss you can collect will depend on what

percentage of the full value of the property you have insured it

for. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

16\. If your loss is caused by someone else\'s negligence the insurer

has the right to sue that negligent third party for the amount

it has reimbursed you under the policy. This is known as the

insurer\'s right of subrogation. However the insurer will usually

waive this right upon request. For example if you have leased

your insured building to someone and have waived your right to

recover from the tenant any insured damages to your property

you should have your agent request the insurer to waive the

subrogation clause in the fire policy on your leased building.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

17\. A building under construction can be insured for fire lightning

extended coverage vandalism and malicious mischief. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

Liability Insurance

1\. Legal liability limits of \$1 million are no longer considered

high or unreasonable even for a small business. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

2\. Most liability policies require you to notify the insurer

immediately after an incident on your property that might cause

a future claim. This holds true no matter how unimportant the

incident may seem at the time it happens. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

3\. Most liability policies in addition to bodily injuries may now

cover personal injuries (libel slander etc.) unless these are

specifically excluded. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

4\. Under certain conditions your business may be subject to

bodily injury or property damage claims even from trespassers.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. You may be legally liable for damages even in cases where you

used reasonable care. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

6\. Even if a suit against you is false or fraudulent the liability

insurer pays court costs and legal fees. If you are found liable

the insurer will pay interest on judgments in addition to the

liability judgments themselves. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

7\. You can be liable for the acts of others under contracts you

have signed with them. Some of this liability is insurable.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

8\. In some cases you may be held liable for fire loss to property

of others in your care yet this property normally would not be

covered by your fire or general liability insurance. This risk

can be covered by a variety of coverage forms depending on the

type of property involved. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Automobile Insurance

1\. When an employee or a subcontractor uses a vehicle on your

behalf you can be legally liable even though you don\'t own the

vehicle. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. Five or more automobiles or motorcycles under one ownership

and operated as a fleet for business purposes can generally be

insured under a low-cost fleet policy against both material

damage to the vehicles and liability to others for property

damage or bodily injury. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

3\. You can often get deductibles at varying levels and thereby

reduce your premiums accordingly. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

4\. Medical payments under automobile insurance cover medical

claims including your own arising from automobile accidents

regardless of the question of negligence. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. In most states you must carry liability insurance or be prepared

to provide other proof (such as a surety bond) of financial

responsibility when you are involved in an accident. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

6\. You can purchase uninsured motorist protection to cover your

own injury claims from someone who has no insurance. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

7\. Personal property stored in an automobile and not attached to it

(for example merchandise being delivered) is not covered under

an automobile policy. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Workers\' Compensation

1\. Federal and common law requires that an employer (a) provide

employees with a safe place to work (b) hire competent fellow

employees (c) provide safe tools and (d) warn employees of an

existing danger. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. If an employer fails to provide the above the employer is liable

for damage suits brought by an employee and possible fines or

prosecution. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

3\. State law determines the level or type of benefits payable under

workers\' compensation policies. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

4\. Not all employees are covered by workers\' compensation laws.

The exceptions are determined by state law and therefore vary

from state to state. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. In nearly all states you are now legally required to cover your

workers under workers\' compensation. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

6\. You can save money on workers\' compensation insurance by

seeing that your employees are properly classified. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

7\. Rates for workers\' compensation insurance vary from 0.1

percent of the payroll for safe occupations to about 25 percent

or more of the payroll for very hazardous occupations. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

8, Most employers can reduce their workers\' compensation

premium by reducing their accident rates below the average.

They do this by using safety and loss-prevention measures.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

**Desirable Coverages**

Some types of insurance coverage, although not absolutely essential,
will greatly add to the security of your business. These coverages
include business interruption, crime, glass, rental, boiler and
machinery insurance.

Business Interruption Insurance

1\. You can purchase insurance to cover expenses that would

continue if a fire shut down your business\--such as salaries to

key employees taxes interest depreciation and utilities as well as

the profits you would lose. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. Under properly written contingent business interruption

insurance you can also collect if fire or other peril closes down

the business of a supplier or customer thus interrupting your

business. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

3\. The business interruption policy provides payments for amounts

you spend to hasten the reopening of your business after a fire

or other insured peril. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

4\. You can get coverage for the extra expenses you suffer if an

insured peril seriously disrupts but doesn\'t actually close your

business. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. When the policy is properly endorsed you can get business

interruption insurance to indemnify you if your operations are

suspended because of failure or interruption of the supply of

power light heat gas or water furnished by a public utility

company. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Crime Insurance

1\. Burglary insurance excludes such property as accounts fur

articles in a showcase window and manuscripts. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

2\. Coverage is granted under burglary insurance only if there are

visible marks of the burglar\'s forced entry. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

3\. Burglary insurance can be written to cover in addition to money

in a safe inventory merchandise and damage incurred in the

course of a burglary. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

4\. Robbery insurance protects you from loss of property money

and securities by force trickery or threat of violence on or off

your premises. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

5\. A comprehensive crime policy written just for small business

owners is available. In addition to burglary and robbery it

covers other types of loss by theft destruction and disappearance

of money and securities. It also covers theft by your employees.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

6\. If you are in a high-risk area and cannot get insurance through

normal channels without paying excessive rates you may be able

to get help through the federal crime insurance plan. Your agent

or state insurance commissioner can tell you where to get

information about these plans. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Glass Insurance

1\. You can purchase a special glass insurance policy that covers

all risk to plate-glass windows glass signs motion picture screens

glass brick glass doors showcases counter tops and insulated

glass panels. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. The glass insurance policy covers not only the glass itself but

also its lettering and ornamentation if these are specifically

insured and the costs of temporary plates or boarding up when

necessary. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

3\. After the glass has been replaced full coverage is continued

without any additional premium for the period covered. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

Rental Insurance

1\. You can buy rental insurance that will pay your rent if the

property you lease becomes unusable because of fire or other

insured perils but your lease calls for continued payments.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. If you own property and lease it to others you can insure against

loss if the lease is canceled because of fire and you have to rent

the property again at a reduced rental. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

**Employee Benefit Coverages**

Insurance coverages that can be used to provide employee benefits
include group life insurance group health insurance disability insurance
and retirement income. Key employee insurance protects the company
against financial loss caused by the death of a valuable employee or
partner.

Group Life Insurance

1\. If you pay group insurance premiums and cover all employees

up to \$50,000 the cost to you is deductible for federal income

tax purposes and yet the value of the benefit is not taxable

income to your employees. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. Most insurers will provide group coverage at low rates even if

there are 10 or fewer employees in your group. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

3\. If the employees pay part of the cost of the group insurance

state laws require that 75 percent of the employees must elect

coverage for the plan to qualify as group insurance. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

4\. Group plans permit an employee leaving the company to convert

group insurance coverage to a private plan at the rate for his or

her age without a medical examination within 30 days after

leaving the job. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Group Health Insurance

1\. Group health insurance costs much less and provides more

generous benefits for the worker than individual contracts do.
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. An employer pays the entire cost for group health insurance.

Individual employees cannot be dropped from a group plan

unless the entire group policy is canceled. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

3\. Generous programs of employee benefits such as group health

insurance tend to reduce labor turnover. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Disability Insurance

1\. Workers\' compensation insurance pays an employee only for

time lost because of work injuries and work-related sickness \--

not for time lost because of disabilities incurred off the job. But

an employer can purchase at a low premium insurance to replace

the lost income of workers who suffer short-term or long-term

disability not related to work. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. You can get coverage that provides employees with an income

for life in case of permanent disability resulting from work-

related sickness or accident. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Retirement Income

1\. If you are self-employed you can claim an income tax deduction

for funds used for your and your employees\' retirement through

insurance or annuities approved for use under the Employees

Retirement Income Security Act of 1974 (ERISA). \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

2\. Annuity contracts may provide for variable payments in the

hope of giving the annuitants some protection against the

effects of inflation. Whether fixed or variable the annuity can

provide retirement income that is guaranteed for life. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

Key Employee Insurance

1\. One of the most serious setbacks that a small company can incur

is the loss of a key employee. But your key employee can be

insured with life insurance and disability insurance owned by

and payable to your company. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

2\. Proceeds of a key employee policy are not subject to income tax

but premiums are not a deductible business expense. \_\_\_\_\_\_\_
\_\_\_\_\_\_\_

3\. The cash value of any key employee insurance that accumulates

as an asset of the business can be borrowed against and the

interest and the dividends are not subject to income tax as long

as the policy remains in force. \_\_\_\_\_\_\_ \_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**APPENDIX B: GLOSSARY OF INSURANCE TERMS**

*Adjuster*. A person who settles insurance claims. An adjuster may be an
insurance company employee or an independent operator.

*Adjustment*. The settlement of a claim; financial premium
determination.

*Agent\'s authority*. The authority placed in an agent by the insurance
company; the extent to which the agent may act on behalf of the company.
This authority is defined by a contract between the agent and the
company.

*All-risk*. A term commonly used to describe broad forms of property or
liability coverage. It is misleading because no property or liability
policy truly provides an all-risk coverage \-- a policy will invariably
contain some exclusions.

*Appraisal*. An estimate of value loss or damage.

*Assigned risk*. A risk that has been declined by one or more companies.
Such a risk may be assigned to designated companies by a recognized
authority. The operation is called an assigned risk plan.

*Assured*. The insured; the one for whom insurance is written.

*Basic benefits*. Generally all benefits offered by a group health plan
except major medical. Basic benefits may include hospital surgical
physician care diagnostic lab and X-ray radiation

therapy dental expenses and supplemental accident coverage.

*Beneficiary*. A person who will receive policy benefits.

*Benefit formula*. Defines the amounts of life insurance that may be
purchased for employees in a specific classification (e.g. salary
occupation length of service etc.).

*Benefit*. That amount payable under an insurance policy because of an
accident injury or illness.

*Binder*. An agreement usually written whereby one party agrees to
insure another party pending receipt of a final action upon the
application.

*Business interruption*. Insurance covering the loss of earnings
resulting from the destruction of property; called use and occupancy
insurance.

*Cancellation*. The termination of an insurance contract by either the
insurance company or the insured.

*Carrier*. An insurance company.

*Cash deductible*. The amount of money the insured must pay for covered
expenses before certain benefits can begin.

*Cash value*. The value in cash of a life insurance policy.

*Casualty*. An accident occurrence or event or the person to whom it
happens; the general term applied to insurance coverages for an accident
occurrence or event.

*Certlet*. A booklet describing the benefits and all the provisions of a
group policy that affect the insured. The certlet becomes a
certification of insurance when the person is eligible for the
insurance. It is then the legal document that proves the person is
actually insured.

*Claim*. A request by the insured for benefits under an insurance
policy.

*Coinsurance*. Two or more entities providing insurance protection and
sharing in losses.

*Compensation*. Wages salaries awards fees or commissions; any return in
payment for a financial loss.

*Comprehensive*. A loosely used term signifying broad or extensive
insurance coverage.

*Contributory*. A group insurance plan paid partly by employees and
partly by the employer.

*Contributory negligence*. Partial responsibility for one\'s own injury
or damage.

*Coverage*. The insurance protection provided by the policy.

*Declarations*. That part of an insurance policy containing the
information about the applicant listed on the insurance application.

*Deductible*. An amount the insured must pay before insurance benefits
will be paid.

*Discount*. A reduction applied to an insurance premium.

*Draft*. A financial instrument similar to a check frequently used by
insurance companies to pay losses.

*Effective date*. The date a policy is put in force; the inception date.

*Endorsement*. A written amendment affecting the declaration insuring
agreements exclusions or conditions of an insurance policy; a rider.

*Evidence of insurability*. Medical proof from either a questionnaire or
a physical examination that an applicant employee or dependent is
healthy and therefore insurable.

*Examiner*. An individual who reviews evaluates and processes claims.

*Exclusion*. That which is expressly eliminated from the coverage under
an insurance policy.

*Expiration date*. The date an insurance policy terminates.

*Exposure*. Person or property to whom injury or damage will cause an
economic loss.

*Face amount*. In life insurance the amount of basic coverage stated on
the face of the policy.

*Grace period*. A period beyond the premium due date during which the
premium may be paid and the insurance will be continued in force.

*Group insurance*. Insurance covering a group of employees.

*Hazards*. A condition that creates or increases the probability of a
loss.

*Health insurance*. Commonly called accident and health insurance
protection against financial loss from a personal accident or illness.

*Incurred loss*. A loss that while not yet paid has been sustained and
for which reserves have been established to pay in the future.

*Indemnity*. Insurance protection that will place the insured in the
same financial position as before a loss was sustained.

*Inspection*. An examination by those having authority. An insurance
company usually reserves the right to inspect any property it insures.

*Insurance*. Protection against loss. The insured sacrifices a small
certain loss (the premium) for protection against a large uncertain loss
(e.g. an accident fire or death). The insurance

company assumes the risk by employing the law of large numbers and the
principle of risk spreading.

*Insured*. The entity whose life or property is protected by the
insurance. The one for whom insurance is written.

*Lapse*. To fail to continue an insurance policy; to cease to provide
insurance protection.

*Liability*. Being bound by law and justice to do something that may be
enforced by the courts.

*Limits*. The value or amount of a policy; the greatest amount that can
be collected under the policy.

*Loss*. In insurance the amount the insurer is required to pay because
of the insured\'s loss.

*Multi-peril insurance*. An insurance policy that provides coverage
against many perils. Sometimes called a package policy.

*Occurrence*. A continuance of a repeated exposure to conditions that
result in injury.

*Peril*. Anything that may cause a loss.

*Policy*. A legal contract of insurance.

*Policyholder*. The owner of the policy; the one who purchases the
policy and pays the premiums.

*Policy period*. The term for which insurance remains in force sometimes
definite sometimes not.

*Premium*. The cost of an insurance policy; the charge the policyholder
pays for the insurance protection.

*Property*. The thing owned; real property is real estate and things
attached to it; anything else is personal property.

*Property damage*. Physical damage to property.

*Provisions*. The terms or conditions of an insurance policy.

*Rate*. Cost per unit of insurance.

*Reinstate*. To restore coverage after it has been canceled or
suspended.

*Reinsurance*. Insurance placed by an underwriter in another company to
reduce the amount of the risk his or her company has assumed.

*Renew*. To continue; to replace as with a new policy.

*Rider*. An endorsement.

*Schedule of benefits*. The amount of insurance for which each
classification of employee is eligible. (Classifications can be based on
salary wage occupation or length of service.)

*Self-insurance*. An arrangement whereby instead of purchasing an
insurance policy a party maintains a reserve fund for self-protection
against a loss.

*Settlement option*. The way in which money for the death benefit of an
insurance policy will be paid to a beneficiary.

*Surety*. A guarantee that a person normally called the principal will
perform according to a statute or a contract. Surety offers protection
to a third party normally called an obligee.

*Underwriter*. The insurance company; a party assuming risk; the person
performing the underwriting function.

*Void*. Of no force; null.

*Waiting period*. A period immediately after the inception of the policy
during which no benefits will be paid even if a loss occurs. Pertains to
health insurance.

*Waiver of premium*. In life insurance a provision that states that if
the insured becomes disabled and the disability appears total and
permanent the insurance policy will continue in full force without
further payment or premium.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**APPENDIX C: INFORMATION RESOURCES**

**U.S. Small Business Administration (SBA)**

The SBA offers an extensive selection of information on most business
management topics, from how to start a business to exporting your
products.

This information is listed in The Small Business Directory. For a free
copy contact your nearest SBA office.

SBA has offices throughout the country. Consult the U.S. Government
section in your telephone directory for the office nearest you. SBA
offers a number of programs and services, including training and
educational programs, counseling services, financial programs and
contract assistance. Ask about

 **Service Corps of Retired Executives (SCORE)**, a national
organization sponsored by SBA of over 13,000 volunteer business
executives who provide free counseling, workshops and seminars to
prospective and existing small business people.

 **Small Business Development Centers (SBDCs)**, sponsored by the SBA
in partnership with state and local governments, the educational
community and the private sector. They provide assistance, counseling
and training to prospective and existing business people.

 **Small Business Institutes (SBIs)**, organized through SBA on more
than 500 college campuses nationwide. The institutes provide counseling
by students and faculty to small business clients.

For more information about SBA business development programs and
services call the SBA Small Business Answer Desk at 1‑800‑U‑ASK‑SBA
(827‑5722).

**Other U.S. Government Resources**

Many publications on business management and other related topics are
available from the Government Printing Office (GPO). GPO bookstores are
located in 24 major cities and are listed in the Yellow Pages under the
bookstore heading. You can request a Subject Bibliography by writing to
Government Printing Office, Superintendent of Documents, Washington, DC
20402‑9328.

Many federal agencies offer publications of interest to small
businesses. There is a nominal fee for some, but most are free. Below is
a selected list of government agencies that provide

publications and other services targeted to small businesses. To get
their publications, contact the regional offices listed in the telephone
directory or write to the addresses below:

**Consumer Information Center (CIC)**

P.O. Box 100

Pueblo, CO 81002

The CIC offers a consumer information catalog of federal publications.

**Consumer Product Safety Commission (CPSC)**

Publications Request

Washington, DC 20207

The CPSC offers guidelines for product safety requirements.

**U.S. Department of Agriculture (USDA)**

12th Street and Independence Avenue, SW

Washington, DC 20250

The USDA offers publications on selling to the USDA. Publications and
programs on entrepreneurship are also available through county extension
offices nationwide.

**U.S. Department of Commerce (DOC)**

Office of Business Liaison

14th Street and Constitution Avenue, NW

Room 5898C

Washington, DC 20230

DOC\'s Business Assistance Center provides listings of business
opportunities available in the federal government. This service also
will refer businesses to different programs and

services in the DOC and other federal agencies.

**U.S. Department of Health and Human Services (HHS)**

**Public Health Service**

**Alcohol, Drug Abuse and Mental Health Administration**

5600 Fishers Lane

Rockville, MD 20857

Drug Free Workplace Helpline: 1‑800‑843‑4971.

Provides information on Employee Assistance Programs.

National Institute for Drug Abuse Hotline: 1‑800‑662‑4357. Provides
information on preventing substance abuse in the workplace.

The National Clearinghouse for Alcohol and Drug Information:
1‑800‑729‑6686 toll‑free. Provides pamphlets and resource materials on
substance abuse.

**U.S. Department of Labor (DOL)**

**Employment Standards Administration**

200 Constitution Avenue, NW

Washington, DC 20210

The DOL offers publications on compliance with labor laws.

**U.S. Department of Treasury**

**Internal Revenue Service (IRS)**

P.O. Box 25866

Richmond, VA 23260

1‑800‑424‑3676

The IRS offers information on tax requirements for small businesses.

**U.S. Environmental Protection Agency (EPA)**

**Small Business Ombudsman**

401 M Street, SW (A‑149C)

Washington, DC 20460

1‑800‑368‑5888 except DC and VA

703‑557‑1938 in DC and VA

The EPA offers more than 100 publications designed to help small
businesses understand how they can comply with EPA regulations.

**U.S. Food and Drug Administration (FDA)**

**FDA Center for Food Safety and Applied Nutrition**

200 Charles Street, SW

Washington, DC 20402

The FDA offers information on packaging and labeling requirements for
food and food‑related products.

**For More Information**

A librarian can help you locate the specific information you need in
reference books. Most libraries have a variety of directories, indexes
and encyclopedias that cover many business topics. They also have other
resources, such as

 **Trade association information**

Ask the librarian to show you a directory of trade associations.
Associations provide a valuable network of resources to their members
through publications and services such as newsletters, conferences and
seminars.

 **Books** \-- Many guidebooks, textbooks and manuals on small business
are published annually. To find the names of books not in your local
library check Books In Print, a directory of books currently available
from publishers.

 **Magazine and newspaper articles** \-- Business and professional
magazines provide information that is more current than that found in
books and textbooks. There are a number of indexes to help you find
specific articles in periodicals.

In addition to books and magazines, many libraries offer free workshops,
lend skill‑building tapes and have catalogues and brochures describing
continuing education opportunities.