Business Insurance -an overview
Why is business insurance important?
Business and commercial insurance is critical for all business to help them manage and control risks of external factors having a financial impact on the organisation. This could be unforeseen risks like theft, an accident or a significant weather event.
Having business insurance allows a business to have peace of mind, but so many company owners place the issue of insurance too low on their list of priorities.
Businesses need clear advice and guidance on the types of insurance that are relevant to their needs. But what insurance should you go for?
At this stage the best advice is to speak to a broker; Most brokers provide advice and will search the market for the insurance each business requires providing a recommendation based on your businesses demands and needs. To find a broker lookout for the chartered logo and you can find a broker on the British Insurance Brokers Association website www.biba.org.uk
What do you have to have?
Some insurance covers are legal requirements:
Employers’ liability insurance is legally required for those businesses taking on staff, volunteers or contractors who are considered labour only. All businesses, charities and organisations with staff or volunteers have obligations under the employer’s liability at work act, there is an exemption for ltd companies with only one director (this director would be considered an employee of the limited company) but Ltd companies with 2 or more directors are required to have EL cover. Employers liability covers the legal obligations that employers have to their employees and the liability that employers have in the event of their injury through the employer’s negligence.
Motor insurance covering obligations under the road traffic act is a legal requirement, these obligations would be covered by Third Party motor insurance, although most businesses would choose to insure to a higher level of cover for motor insurance such as third party, fire and theft or comprehensive cover.
Some sectors also have individual requirements for compulsory covers such as Insurance Brokers and solicitors who must hold Professional indemnity insurance in order to be given regulatory consent to trade, Riding Schools must hold Public liability insurance in order to be granted a license by the local authority.
Contrary to popular myths other insurance is not compulsory but is certainly advisable to have covers which reduce the exposure to a business should the worst happen.
Other insurance covers
Whether you are a business owner, a large business, self-employed, tradesman or a contractor getting insurance in place can help to protect you and your company against unexpected events is critical for that piece of mind. There is a wide range of insurance products available offering varying degrees of cover, so ensuring that you have the correct amount and types of insurance for your business is incredibly important again getting the best advice is the key.
When the unexpected does happen to a business, it is important for businesses to know what they are insured for and how to expect the insurance to perform. Insurance is designed to return the policyholder to the same financial position that they were in before the incident took place. This may be through replacement or indemnity.
Public Liability Insurance – This covers third party property damage and bodily injury caused by the negligence of the policyholder. It will cover the cost of compensation to members of the public for injury, death or damage and the potential exposure here for businesses can be unlimited. As such the limits of indemnity for cover tend to be in blocks of million-pound chunks, due to the changes in the discount rate recently, understanding what level you may require is something to consider with your advisor. Products liability can be bought alongside public liability and this covers the same legal negligence arising from the supply of products.
Professional Indemnity insurance – this covers financial loss arising from wrongful advice or design, it is important for any professional advisors (such as consultants, advisors and professionals) and businesses providing design work (such as architects, designers of construction projects).
Property or Material Damage cover
The physical assets of a business can be covered against most perils which are unforeseen, quantifiable and happen suddenly such as fire, theft, storm, flood, malicious or accidental damage. Each insurance policy will provide different cover with different perils insured so understanding what perils are covered is key to ensuring you have the right protection.
Property cover will cover all kids of physical assets such as buildings, contents, computers, stock etc
Business interruption cover will cover any loss of profits as a result of a material damage claim on the property, and can either cover loss profits or additional costs depending on your needs as a business.
Other covers which can be found under property damage are covers such as money cover or goods in transit.
Many commercial insurance products are sold as packages either specific to your business type as a shop or office policy or as a commercial combined policy.
Digital assets are now increasingly important for businesses of all sizes and the risks posed by the increased connectivity and digitisation we face are new and evolving.
Cyber insurance is becoming increasingly vital for businesses to protect against malicious and non-malicious cyber events. that compromise our digital world. Cyber insurance can provide cover for business interruption following a cyber event, data breaches, ICO notification costs, cyber extortion, damage to digital assets, media liability and some third-party costs.
Getting the advice of a chartered independent insurance broker is critical to getting the right advice for your business insurance needs – find an expert broker you can work with to protect your business from risk.
Business insurance thinking from Yorkshire Powerhouse
Have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know: