Insuring your business: part three
Welcome back to our new series on business protection. If you missed parts one and two, head over and give them a quick read now.
As we discussed in our previous post, most businesses have physical assets that need to be insured in case of damage or loss. But some businesses require additional cover for more specific areas and activities.
Additional insurance cover
The nature of a firm’s business will dictate if it needs to take out special types of additional insurance. There is a range of specific policies available, some of which will have more relevance to certain businesses than others.
Laptops and mobile phones can be expensive and vulnerable, so they must be insured against fire, theft and accidental damage whether on or away from the business premises.
Goods in transit
Any business that transports its goods should invest in cover to protect them against damage, loss or theft while in transit. The policy ought to cover road hauliers, couriers, the post or one of the company’s own vehicles, and should include door-to-door deliveries.
Stock that is susceptible when in storage – food items kept in a freezer, for example – should be insured against accident or damage.
Cash, cheques, stamps, normally to a set limit, can all be covered against loss or theft. The premium will be priced on whether the money is on the business premises, in a safe or in transit.
Businesses whose employees regularly travel abroad will need travel insurance.
Expenses insurance will provide a business with compensation if it should experience a financial loss.
Businesses that are unable to meet their commitments on loans and overdrafts, either though accident or sickness, can take out insurance to protect the repayments.
Legal actions can be very expensive. Legal expenses insurance will cover the costs involved in conducting or defending a legal action and, depending on the policy, employment disputes, tribunals and tax audits.
Should a customer be unable to pay a bill as a result of a business failure, the loss can be made good, wholly or in part, with a credit insurance policy.
Some machinery is specialised or expensive enough to require its own insurance policy. In some cases, and depending on the type of machinery involved, insurers will insist on inspecting the machinery involved on a regular basis.
Data processing insurance
Businesses that handle large amounts of electronic data can get insurance to protect their processing equipment.
The law stipulates that all business vehicles must have insurance cover.
However, a business must also make sure any vehicles that belong to its employees but which are used for business purposes are also covered for business use. The same applies to the business owner’s vehicle or vehicles; any private insurance policy will have to be extended to include business use.
A business should also consider the type of business use to which the vehicles are to be put. This is because varying types of business use require different sorts of cover. A sales employee who is constantly on the road will not be treated for insurance purposes in the same way that an employee who only rarely drives on company business.
Businesses with more than five vehicles may be able to get discounted fleet insurance.
A business must inform its insurers if any of the employees who drives for the firm has been convicted of a serious motor offence in the past five years. Failure to do so could mean that the business will not be insured.
Normal household insurance policies are not sufficient to cover those people who run their business from their homes.
They will need to extend their household policies to include any office or business equipment. If clients visit their home to discuss business projects, then, as with other business premises, a home-run business will also need to take out public liability cover (see our liability insurance guide).
To make sure it has the right type and the right level of general and specialist insurance, a business should consult with an authorised and regulated insurance broker or provider. An insurance provider should be a member of the General Insurance Standards Council; a broker should be chosen through the Institute of Insurance Brokers.
Next time, we’ll look at liability insurance and professional indemnities that some businesses may need to take out.
Do you have appropriate business protection in place? If you’d like to discuss your existing provision and get an independent review with suggestions for insuring your business, get in touch with us.