Businesses are tricky things, and insuring them can be one of the trickiest things of all. Insurance can be confusing and that’s why getting the right insurance company or broker is so important. They can get to grips with your operation, explain all the features and find, or create, a policy which fits best.
Don’t give up control though! Make sure you take the time to read all the assumptions for example and do not assume they do not apply to you! Also, make sure you question and if necessary challenge anything you’re not sure about and ask anytime you don’t understand.
The following is a quick guide to some of the more important features of your policy and should go a long way to bringing up to speed with what to look out for.
Probably your most valuable protection, public liability will pay compensation should someone get hurt as a result of your business. A good example is if someone were to trip on a broken stair. A serious injury could result in a massive pay-out, even into the millions, to compensate their injury or loss and public liability insurance could mean you wouldn’t have to front that cost yourself.
Don’t forget to advise your broker if you work away from your main premises at all i.e. from installations or deliveries. If you do this may need to be added into your protection.
This is very similar to public liability but is specifically for your employees. The legal minimum in the UK is £5 million and is a legal requirement for most businesses. This guarantees you as the employer has enough protection in place to meet your duty of care to employees working on your behalf.
A common misconception on this element of cover is that it’s only required if you have permanent staff. However in reality this is required for ANYONE who is under your direction or uses your materials and machinery. Even if you are not paying them! This includes volunteers, work experience staff, apprentices, freelancer and contracted employees.
Imagine you turn your office or shop upside down. Anything that isn’t attached and hits the ceiling as it falls is considered your ‘contents’. Anything that stays attached is considered ‘buildings’. Sinks, windows, light fittings etc are therefore part of the building insurance. Desk, computers and cabinets are ‘contents’. If you rent the property check your tenancy agreement and be sure whether you or your landlord should be insuring contents belonging to the landlord.
Stock - Don’t underestimate the value of your stock so take the time and calculate carefully. High valued stock like electrical equipment may need to be listed out as separate named items in order to get an appropriate quote. Check if your policy covers you for seasonal increases to – for example in the run up to Christmas you may have a higher level of stock. Your insurance can account for this by agreeing a rise in stock by percentage for this time of year.
Tenants Improvements Cover - Do you trade out of a rented or leased property? You may want to adapt the functionality of the premises such as adding in air conditioning or installing a kitchen but don’t forget to up date your policy to include cover for them. To do this simply work out the extra cost and raise the ‘contents sum insured’ limit accordingly.
If your business has to stop trading, business interruption protection can cover you to continue paying your rent, overheads, wages and other expenses that you need in order to keep your business alive while the problems are resolved. The indemnity period is the length of time you can claim for business interruption costs.
Alternatively to claiming business interruption, in some cases a business can instead claim for ‘increased cost of working’. This means that instead of having to cease trading while your property is being returned to working order, you could simply pick up and move to an alternative property, claim those moving expenses and keep trading. Insurance companies obviously prefer this option as it costs them a lot less, but many businesses also prefer it as they can keep trading, fulfil orders and retain their customers.
What if something changes in your business?
Tell your broker! Your turn over may have increased, or you may have purchased an expensive piece of kit. Make your policy count by keeping it up to date!
No claims discount for your business
Have you been running this or another business for some time? It’s looked upon by insurers a bit like driving a car. The reasoning is that if you haven’t made a claim in the past 2 or 5 years then that makes you a better business owner. This makes you a safer customer for them and many will account for this when working out your premium. But if you don’t ask, you might not get.
No businesses are the same, and it’s not often that an off the shelf solution will give you the best fitting cover and a reasonable price. Specialist business insurers will be able to take into account you staff, turnover, location, industry and individual situations to build a policy around your needs. They will also be able to support you in lowering your risk possibly provide additional resource too.