Do I Really Need Business Insurance?
No matter what type of business you run, it is essential that you have adequate business insurance in place: this will protect the firm from potentially huge costs should it suffer a loss or accident. It is unlikely that most businesses could afford to pay for costly repairs or large legal fees without help from an insurance company.
There are many different types of business insurance, and some are compulsory by law (such as Employers’ Liability, Third Party Motor Insurance and Engineering/Inspection).
What Does Business Insurance Cover?
The insurance industry have created simple, low cost ‘packages’ which would suit most businesses on our Islands (such as building contractors, shops, offices, restaurants and hotels). These packages cover the following sections:
· Assets. You can cover buildings, contents, stock and tenants’ improvements.
· Business Interruption. This covers any loss of revenue/gross profit the business may suffer resulting from loss or damage. This section can be crucial to any business, and it is very important that the ‘sum insured’ and length of time it covers the business is correct.
· Employers’ Liability. This is a compulsory section under the Health & Safety at Work Act if a business employs staff. Employers’ Liability insurance provides cover for if a member of staff had an accident at work and the business was found to be at fault (and had to pay the employee damages).
· Public/Products Liability. If a member of the public comes into your premises and is injured – or if you provide products to your customers and they are defective and cause injury – this section deals with it.
· Legal Expenses. Many ‘package’ policies now have legal expenses cover built in. This pays legal costs if the business has any disputes with third parties (such as contractors or suppliers) as well as other matters (such as tax).
Other types of insurance policies which a business may require are:
· Professional Indemnity. If a business provides professional advice or services for a fee (such as lawyers, accountants and architects), they should have a Professional Indemnity policy (and, indeed, many professional firms are made to buy PI cover by their governing bodies or regulators). PI covers the initial legal defence costs and any subsequent damages if a client alleges work that the firm carried out was wrong and has caused a financial loss.
· Directors’ & Officers’ Liability. Limited companies have limited liability status whereas Directors/Officers (the term ‘officer’ could apply to anyone with any form of authority within a company) face unlimited liability and potentially losing their home. A D&O policy pays the initial defence costs and then any subsequent damages (should the Director/Officer face an allegation of carrying out a wrong-doing in their capacity as a Director/Officer.
· Cyber Insurance. If a company runs a website and any type of IT system, there is a risk of it suffering some form of attack whether it is targeted or opportunist. The main cause of losses are employees opening emails that have ‘malware’ attached. Such emails are designed to complete a particular function: such as copy credit card information or sensitive client information. A Cyber Insurance policy gives free access to forensic IT specialists and lawyers to help deal with any attack, and also pays the business for lost revenue if they are unable to trade due to an attack.
· Engineering/Inspection. This is a compulsory type of insurance under the Health & Safety at Work Act for any business that operates plant/machinery which is designed to lift things or work under pressure (examples of these are vehicle ramps, forklifts, cherry pickers, passenger lifts and air compressors). Each item of plant/machinery has to be inspected either once or twice a year by an independent qualified inspector.
· Motor Fleet. Under the Road Traffic Act, if a business owns vehicles, each vehicle must have at least Third Party Liability cover. It is often better (and more cost effective) to have one Motor Fleet policy which covers all of the vehicles the business owns.
I already have business insurance – do I need to review this?
It is very important that you review your business insurance at least once a year (normally at renewal time), or if there is a significant change within the business during the insurance period (such as increasing stock levels or getting involved in different activities). It is also vital to make sure that your business description is accurate because an insurer could deny a claim if they do not know (and accept) what activities a business carries out.
Why Choose Cherry Godfrey?
Cherry Godfrey have qualified brokers who like to get to know you and your business; we take pride in giving the best advice about the insurance policies that would be most suitable. We also provide free quotations.
Ours is a personal and comprehensive service: for example, we will come out to visit you (which can be particularly useful if we need to take pictures in order to show an insurer if your risk is more complicated than others). We have access to many different Insurance companies and schemes which are not only competitive but also give wide cover. We can also give advice on how to reduce your risk exposure - which should then bring your insurance premiums down. Contact us today to find out more about how we can help you.