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Business Insurance Explained
If you have just started a new enterprise or have been asked to look after the company's insurance renewals, business insurance can at first seem a daunting proposition. After all, much of the language and industry jargon such as endorsements, indemnity levels and excess periods can at first appear alien.
Then there is the question of knowing what covers to get.
With the responsibility of ensuring that the business activities and property are completely covered from risks that the firm might face, a new small businessman may well also be confused by the plethora of covers, plans and policies that are available today.
Business insurance is however fairly simple even for newbies, if you break it down from the top.
There are basically two types of risk that a business may face in daily operations, these being business property risks and business liability risks.
All business insurance policies contain elements of the two risks either separate or combined under a single plan. If you need cover for business buildings and premises contents, you will need property insurance. If you need cover for the work you do, you will require liability insurance. Most businesses need elements of both.
Business property buildings insurance protects all risks to a business premises covering loss,material damage and consequential loss to all buildings, outbuildings, fixtures and fittings on the premises. The premiums are calculated on rebuilding costs of the business property and will also contain elements of public liability to protect a business against claims from the public of for example, a wall falling on a passer-by.
Property contents insurance covers loss or damage to the contents of the business premises. Business contents policies typically have provision to cover items such as furniture, tables and desks, computer equipment, telecommunications equipment, business electronic equipment, data, tools, machinery, stock, high risk stock, raw materials, fabricated, assembled, manufactured or stored goods and anything used in the daily operation on the business premises. Freight, cargo and goods in transit cover options provide insurance for the businesses property away from the premises.
Business property insurance polices are typically marketed by the type business property they provide insurance for. For example office insurance, shop insurance, hotel insurance and pub insurance are popular commercial property insurance schemes which contain all the relevant covers for each use of the property type.
Much commercial property is either rented or leased, in particular offices and shop space. Business insurance provides specialist cover for property owners of these types of premises with a let property insurance policy, which is tailor-made for business landlords.
Liability Insurance protects a business against all liabilities that the enterprise might be liable for as it carries out its daily actions. Liabilities are events which occur that could lead to claims against the proprietor, trader, owner, partnership or company. Liability insurance cover protects the company profits against all damages and costs incurred resulting from the claim.
Business Liability Insurance includes Public Liability Insurance, Employers Liability, Products Liability, Directors and Company Officers Liability and Professional Indemnity Insurance.
Public Liability protects the business profits against claims from members of the public and this cover forms the basis of a standard business insurance contract.
If you employ staff you will require by law Employers liability insurance which protects your business against claims resulting from accidents and injuries to paid employees and sub contractors whilst anywhere at work.
If you sell or provide goods or parts your business will need Products liability insurance.This cover is usually automatically included in for example, a shop insurance policy.
Nearly all business insurance polices sold, in particular those online, are what is known as combined business insurance or trade packages that have been specifically designed for particular trades or professions. Find one that is suitable for your particular company by carrying out a search for your trade, service or profession insurance. These combined business insurance policies contain all the covers you will need in your line of work, ensuring that if a claim against your company is made, you will be covered.
The company owners or directors can also purchase Directors & Officers Insurance or D & O insurance as it is often called, which covers them personally against both civil and criminal liabilities resulting from business activities.
Additionally professional services should purchase Professional Indemnity insurance which covers the service against the liability of any advice that might be given professionally and later turns out to be negligent.
