Part ⅡReading Comprehension (Skimming and Scanning) (15 minutes)
Directions: In this part, you will have 15 minutes to go over the passage quickly and answer the questions on Answer Sheet 1. For questions 1-7, choose the best answer from the four choices marked A), B), C) and D).For questions 8-10, complete the sentences with the information given in the passage.
Buying the Best Insurance for Your Business
Gabrielle Melchionda broke into tears when firefighters accidentally flooded the headquarters of Mad Gab’s, the beauty company she had founded two decades ago, even though she knew that insurance would replace the desks, computers, and shelves of lip balm(唇膏)she had lost. To her surprise, however, the real pain came in the months that followed, when she continued to owe salaries and rent while her sales slowed to a trickle(滴，淌，細(xì)流).
“The critical piece that was missing was business-interruption insurance,” said Ms. Melchionda, who had property and liability insurance but had never got around to adding a policy that replaces income lost after accidents.
Business owners have plenty of stories like Ms. Melchionda’s, of policies that didn’t cover enough damage or covered the wrong risk. Some of these complaints can be attributed to tight-fisted insurance companies or misinformed agents, but the fault often lies with entrepreneurs (企業(yè)家)who gloss over their insurance decisions.
“Generally speaking, small-business owners are not completely aware of the coverage they have or the coverage they need,” said Steven Spiro, an independent insurance agent, explaining that many small-business owners buy insurance simply to comply with the requirements of an office lease.
Picking an Agent
Buying insurance can be intimidating(使人膽怯的), and it’s difficult to know who is trying to take advantage of you and who is giving honest advice. That’s why you should start by asking other entrepreneurs in your industry what kinds of insurance they carry and who they bought it from. There are three types of vendors who can help you pick insurance: independent agents, captive agents(專屬代理人), and risk consultants.
Independent agents, also known as brokers, offer the greatest choice because they typically represent many carriers. They are paid on commission by the insurance company, between 10 percent and 20 percent of the annual premium depending on the policy. Beware: because some carriers pay a higher commission than others, brokers may be tempted to play favorites.
Captive agents represent one insurance company that pays them a salary and commands their loyalty. Some companies such as Allstate only deal with their own agents; that means you can only buy their policies through one of their agents.
Both independent and captive agents receive bonuses at the end of the year based on their ratio of policies sold to damages paid. That means it’s in their interest to sell you as much insurance as possible and minimize your claims as much as possible.
Understand, also, that most agents focus solely on insurance. “Sometimes there are solutions to your problem that might be better treated without insurance,” said Arthur Flitner, a small-business expert at the Insurance Institute of America. In some cases, for example, it makes more financial sense to self-insure against certain property risks by setting up a rainy-day fund, or to minimize lawsuit risks by enforcing strict employment policies.
That’s when a risk consultant can help. Because they’re costly — you’ll usually pay a few thousand dollars for a basic project — it makes sense to hire a risk expert only if you have an unusually risky operation, or run a business with more than, say, $25 million in revenue(收入)or more than 100 employees.
After you’ve found some trustworthy vendors, it’s time to shop for bids. Go to as many brokers and agents as you like, but keep in mind that insurance companies won’t bid on the same account through different brokers.
Picking a Policy
If you’re grossing less than $3 million, you will most likely end up with a business owners policy, known as a B.O.P., which bundles business policies and lets you add additional pieces as necessary. Every carrier assembles its B.O.P. differently, so make sure you’re making accurate comparisons when shopping.
If you are grossing more than $3 million, you will probably have to buy your policies separately. There are four policies you really can’t do business without if you have more than a couple of employees:
Workers’ compensation is required by state law and covers workers’ medical expenses, disability pay and death benefits. Rates vary widely by industry and occupation. While the premiums for a secretary might be 22 cents per $100 of payroll, the rate for a roofer might exceed $20 per $100 of payroll. Make sure your business is classified correctly, and don’t try to pass off your toy factory (manufacturing is considered high-risk) as a design firm (low risk). Once employees start filing claims, carriers will conclude that you are a
riskier-than-usual design firm and raise your premiums.
Property insurance covers your physical premises as well as equipment in your office. Rates vary widely, depending on the age of your building, how far it is from the fire department, and whether it is made of steel or wood.
Beware of coinsurance clauses, which allow carriers to pay only a share of damages if they believe you underinsured your property. Instead, ask your broker to add “agreed value” coverage in which you and the insurance company agree on an appropriate insurance level. This can add up to 15 percent to your premiums, but it leaves less room for dispute later.
General liability insurance covers injuries your company causes to other people’s health, property or reputation. Rates usually take into account factors like revenue, size of your offices and number of customers. Most basic packages cover $1 million for each occurrence; umbrella policies can add more coverage quite cheaply.
If it’s available, make sure you buy the more expensive “occurrence” policy, which covers you for accidents at the time they occurred — even if you have since left the business and your policy has lapsed —as opposed to a “claims made” policy, which covers you only if you are insured when the claim is made.
Business interruption insurance — the kind Ms. Melchionda should have had — pays not just the lost sales and rent and payroll costs while you rebuild your business after an accident; it also pays for you to rent a temporary office or equipment so you can get back on your feet faster.
These policies are just the first building blocks of your insurance coverage. There are dozens of other policies you could add, depending on the kind of business you run. Some, like medical malpractice for doctors and hospitals, are absolutely essential, while others are pure waste. To determine what you need, start by asking yourself two questions: how likely is it that you’ll sustain damage, and could you cover the cost of the damage yourself? As experts like to point out, insurance is meant to cover catastrophes, not pay for
maintenance.
“It’s a gamble,” said George Von York, a public adjuster who helps business owners negotiate higher claims payments from insurers. “Most people will never have a substantial claim in their life. But boy, when you need it, it’s good to have that coverage.”
1. The passage mainly focuses on .
A) how to buy the most suitable insurance for your own business
B) how to pick an agent for you own business
C) how to pick a policy when you buy the insurance
D) how to deal with the insurance company
2. Gabrielle Melchionda .
A) did not realize that the insurance company will compensate her loss in the fire
B) realized the real pain for her loss in the fire when the fire broke out
C) had her company insured against business-interruption
D) was very sorrowful when her beauty company caught fire
3. Buying insurance sometimes is frightening in that .
A) you should ask other people in your industry for the advice
B) it is not easy to distinguish the honest advice and the lie
C) there are different types of agents for you to choose
D) you do not know where to buy insurance for your company
4. If you have an unusually risky operation .
A) you should find a trustworthy vendor
B) you should seek help from insurance company
C) you are supposed to hire a risk expert
D) you are supposed to weigh the risk of your company by yourself
5. What kind of policy is required by the state law?
A) Workers’ compensation
B) Property insurance
C) General liability insurance
D) Business interruption insurance
6. In the policy of “worker’s compensation”, the rates _______________.
A) are the same in different occupation
B) are the same in different industries
C) are different in different occupation but the same in different industries
D). are different in different industries and occupations
7. George Von York ________________.
A) thinks to most people it is not necessary to buy insurance
B) thinks we are supposed to buy certain insurance in our life
C) is a public adjuster who charges higher claims payments from insurers
D) is an excellent seller in insurance
8. Property insurance covers your physical premises as well as .
9. It is necessary for you to buy the more expensive occurrence policy if it is .
10. Business interruption insurance also pays for you to rent .
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