| | | | | |  | | | Why have business insurance?
| | | Quite simply, your business often represents your life's work - and your future. To leave your business without adequate insurance protection would be to leave it vulnerable to failure, with potentially disastrous consequences.
The following does not set out to give full details of all the different types of business insurances available, but simply highlights some of the main types of cover available, and some of the pitfalls of failing to insure your business adequately.
What are the main types of cover?
Property
Property insurance can provide protection against an extensive range of defined perils including fire, malicious damage, flood and theft.
It can provide cover for buildings (if you own them, or are responsible for them under the terms of your lease), your business contents, stock, work in progress and finished goods. Some may also need to consider ‘goods in trust' for other people's property entrusted to you, and property in transit.
The sums insured are generally set by the client depending upon individual needs, though some ‘package' policies will have fixed limits on some items such as money cover.
Business Interruption
Sometimes called Consequential Loss, this usually provides protection against loss of profits following an insured property loss. The indemnity period (the period for which protection is in force) is normally at least 12 months. The sum insured is again normally set by the client - though again, some package insurances will have a set sum insured. Other options are available to meet particular needs.
Liability
Liability insurance provides indemnity against claims from third parties (members of the public or customers) or from employees (and some sub-contractors)
The most common types of cover are Public & Products Liability, and Employers Liability.
Examples of other covers available under this heading are Professional Indemnity and Directors & Officers Liability.
Motor
Motor covers are reasonably straightforward, but may come in a number of different guises depending on the type of vehicle(s) to be insured. The most common form of cover is comprehensive cover, which provides for loss or damage to the vehicle(s) by accidental damage, as well as fire, theft and third party liability. Some clients would select more restricted cover in some circumstances.
Other cove
A wide range of alternatives are available for specific trades and industries such as motor trade insurance, contractors, engineering and the like.
Is any of it compulsory?
There are a few insurance covers that are legal requirements:
Motor insurance
Employers Liability Insurance
Engineering Inspection - for most types of lifting equipment and pressure plant.
Getting the right cover
This is where getting the right advice is key. For most business risks, there are plenty of choices available. A good commercial broker will make recommendations and help you make the right choices depending on your individual requirements. This won't necessarily be the cheapest cover though.
It is vital to ensure that you don't cut any corners, and that you disclose anything that may be relevant about your premises, processes, products or service, and of course your business history (including any claims or losses you've suffered).
It's also important that you understand the basis of your insurance cover. For instance, buildings insurance should represent the full rebuilding cost of your premises - and not the market value. The two are often very different.
With business contents, you must ensure that the value to be insured is adequate. Most policies nowadays are on a reinstatement basis - which effectively means plant, machinery and other business contents should be insured for their value new, and not just be a reflection of current value.
Equally important is getting the sum insured correct under the business interruption cover, and a good broker will help you get this right.
If you take the time to get the right protection in place, you'll have the peace of mind knowing that if the worst should happen, your business should have every chance of surviving it.
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