Your business will become one of your most valuable assets, so putting adequate insurance in place is vital. But what kind of insurance do you need, and how do you get the best price?
The insurance you need
There is a huge range of insurance products available for businesses, covering everything from fires and earthquakes to public liability. Some of the more common forms of insurance include:
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- Workers compensation: Compulsory cover for injuries or death suffered by employees in connection with their work.
- Public liability: Protects against claims from the public injured while on your premises or by you or your staff.
- Burglary and fire and perils: Protects against losses due to burglary or natural disasters.
- Business interruption: Ensures replacement of business income lost due to disaster or accident.
- Motor insurance: Compulsory third party injury insurance and optional damage coverage.
Depending on the kind of business, other more specialised forms of insurance may be appropriate:
- Professional indemnity: Protects businesses who supply advice against liability.
- Product liability: Protects businesses that manufacture or sell products against liability.
- Goods in transit: Covers against loss of goods or damage while in transit.
- Engineering: Protects against losses suffered due to breakdown of vital equipment.
- Directors and officers: Protects directors and senior officers from liability incurred during the performance of their duties.
- Stock loss: Protects against loss due to stock damage caused by disasters such as loss of power or flooding.
The size and nature of your business will determine the type of coverage you need. It is important not to let your coverage fall behind as your business grows or diversifies – a periodic review of your policies to ensure adequate your business is adequately insured is a good idea.
If you plan to operate your business from home, it is likely your existing home and contents policy will not be enough. Most home and contents policies only insure business equipment for a relatively small amount, and do not provide cover for personal injury liability arising out of the conduct of the business.
Similarly, if you spend a lot of time working for your business but are not an employee, you should investigate whether you are covered by your businesses insurance policies. Many standard personal liability, workers compensation and motor liability policies will only apply to conventional employees.
And finally, very small one or two person enterprises face their own particular issues. In businesses of this size, an illness or injury to the proprietor often means closing the doors, making loss of income insurance (not to mention a good health policy) vital. And don’t forget, if your business isn’t incorporated, your personal assets are on the line in the event of legal action or liability.
Protection, at the right price
One way to buy insurance if you’re not an expert is through an insurance broker. Insurance brokers operate in all sectors and many specialise in obtaining insurance for particular industries. Shop around to ensure you find a broker with the expertise, service level and most importantly, fee structure that suits your business.
Insurance brokers often obtain part of their income by receiving a commission when they place a policy with an insurance company. This is not necessarily a bad thing – it should reduce what the broker charges you – but it is important that you know where your broker gets their income from.
Another way to keep a lid on insurance premiums is to do as much as possible to ensure the safety and security of your business. Make sure you have adequate security measures in place including deadlocks, alarms, a fireproof safe, smoke detectors and sufficient lighting for both interior and exterior for personal safety.
Your insurance premium will also be affected by the location of your business, the goods and services you handle and the condition of the building. That cheap shopfront in the dodgy end of town may not be quite the bargain it appears to be when additional insurance costs are taken into account.