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Business Insurance, the low down

Liability Insurance:

Public Liability:

I’m telling not selling so the first thing I need to tell you, is that Public Liability insurance isn’t a legal requirement unless you are going to start a Riding Stables. In any other situation it is born out of two things your own responsibility for your livelihood and the fact that someone won’t use your services or allow you to operate without it. As it sounds it covers members of the public and property from a claim that stems from what you are doing within your trade. It could be that you are a ground worker and you dig into an underground utility pipe or something as trivial as being an insurance broker and putting your laptop bag on the ground and somebody falls over it. These would both warrant a claim for liability. Property damage usually carries and excess of around £100 so really small claims are not made.

Products Liability:

Is for manufacturers or sometimes if you wholesale or distribute anything particularly in the food industry. Products Liability will usually be added in automatically when you opt for Public Liability. It covers you for damage to property or Injury to person from a product you have manufactured. This also applies sometimes to products you have imported where those manufacturers have passed on the responsibility to you as the distributor for any faults in the product.

Employers Liability:

This is a legal requirement for any business that employs staff and pays them on a PAYE basis and for any businesses for instance building firms whereby they take on self-employed labour only subcontractors and they supply them with materials and tools to do their job. In recent years in these situations Insurers will take what is known as an employee reference number or ERN and it will go to the Employers Liability Tracing Office so that it all links together. If you have staff earning under the tax requirement of £11500 and you are exempt from paying tax to employees then you will not have a number and you just have to advise the ELTO you are exempt. Employers Liability will cover you for payments to employees who injure themselves in the course of their employment for instance a painter & decorator who has been told he must move furniture out of the way before painting and injures his back whilst carrying a sofa.

Material Damage Insurance:

Buildings Insurance:

If you own premises or sometimes if you lease and it is a requirement from the landlord you would need to Insure your building from perils such as fire, flood, storm, malicious damage, earthquake and explosion. It is very important to insure the building for the cost to rebuild including clearance costs and architect’s fees. It is now wide knowledge that around 80% of Property owners are deemed to be underinsured. This means that a lower premium is charged and in the event of a claim not enough money will be paid out to be able to reinstate the property. The equation to work out a claim to be paid if you are underinsured is called Average. This was highlighted in the case of The Clock Inn at Chideock which was a thatch property that burnt down and was widely highlighted in the media as underinsured.

The cost to rebuild the property was around £500,000+, yet surveyors worked out the true value of the property at £1.3 Million. So this meant that only 38% of the overall amount required was offered straight away. After much negotiation and getting a second opinion on the value 57% was offered and the owner had a £150’000 shortfall. At the time 17 other properties were revalued in the village and they found £6.9millon in underinsurance. So as you can see over the country this is a big problem.

Contents Insurance:

Again, this is important to have if you have a premises for your business and depending on the type of business you own i.e. retail, warehouse, engineering or leisure you would have different levels of cover and different types of contents again covered against perils such as fire theft, storm, flood, etc. It is likely that if you have a business that holds theft attractive contents such as portable computers then you are likely to be charged more rather than people who have large bulky items such as big printing machines as the likelihood of a fire or food is less than a burglary.

Stock Insurance:

This again depends on the type of stock you hold and the business it is. If you have a large amount of cigarettes and alcohol then it is likely you will pay a higher premium as this again is theft attractive. You should again make sure under stock and contents that you do adequate checks to make sure you have enough cover to put you back in the position you were in before any catastrophe.

Business Interruption:

Business interruption is like it says. If your business is interrupted by a claimable situation such as a flood, theft or fire and you cannot operate because of it, you will continue to be paid an income so that you can continue to pay employees, utilities providers, agreed supplier contracts etc. The problem is that Business interruption is often worked out on Gross Profit and this means that a lot of time businesses just pull a projected figure out of the air when they take their insurance out and when it comes to making a claim the business may have grown and there isn’t enough to cover these costs. So, it is always best when you do a business review to get an accurate Gross Profit figure from your most recent accounts and to maybe add bit to this figure to take growth into account it is always better to be over than underinsured.

A couple of other things to take into account:

Professional Indemnity Insurance:

This covers you if you do any design work or offer advice which could involve a consequential loss for your clients. For instance, if a draughtsman does plans for a house and then the builder works out costs based on these plans but then it turns out more materials are needed because the measurements were out.

Directors & Officers Insurance:

If you direct an employee or a volunteer within an organisation to do something and it is incorrect and causes harm or anguish to that person they may sue you directly rather than sue against the business as the decision was yours alone.

Homeworkers Combined:

This can combine a range of elements from above into one policy and will often also include your own home & contents insurance as well. So, if you say had a beauty therapy business where clients came to your home it would include the liabilities to the public as well.

Commercial Combined:

Again, if you have a Wholesale business for instance you can be operating from a commercial property and save money by taking out a policy which includes many elements from the above options.

Package Policy:

A Package policy often in place for Office, Surgeries, retail, Residential Property or Pubs, Restaurants, Hotels can offer a great saving by working out a premium based on turnover, stock and contents and buildings, they can include automatically, all liabilities, Money, Goods in transit and sometimes even an element of Professional Indemnity, or even equipment breakdown, signs, and glass.

Cyber Insurance:

This is a very new and emerging market. It can cover for the following though.

  • Business interruption loss due to a network security failure or attack, human errors, or programming errors.
  • Data loss and restoration including decontamination and recovery.
  • Incident response and investigation costs, supported by a 24/7/365 multilingual incident reporting hotline and on-demand vendors.
  • Delay, disruption, and acceleration costs from a business interruption event.
  • Legal costs including exercising contractual indemnity.
  • Crisis communications and reputational mitigation expenses.
  • Liability arising from failure to maintain confidentiality of data.
  • Liability arising from unauthorised use of your network.
  • Network or data extortion/ blackmail (where insurable).
  • Online media liability.
  • Regulatory investigations expenses.

Crime Insurance:

  • Protects your business as well as your clients’; if you’re legally liable for their money, securities or property.
  • Protection against a financial loss caused by the criminal or fraudulent taking, obtaining or appropriation of money, securities or property by an employee or third party.
  • Cover for social engineering fraud; fraud committed by deception or impersonation.

If you’d like to save on your business insurance then get in touch using the form below or call 01305 819888 / 07500 962783

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