29 Jul What is business insurance cover?
Why does a business need insurance?
If you are a business owner, you are an entrepreneur and most likely worked very hard and took some risks to get where you are. Why risk losing it all just because of something as elementary as no insurance or the wrong insurance?
Commercial insurance is a tricky business. Get it right and you protect what you worked for. Get it wrong and you can lose it all. And with the current legislation you also stand the chance of losing your private assets.
What is business insurance cover?
It is insurance that protects your business against the normal insurance perils (Fire, theft, weather etc.). But, it is much, much more involved than that. Business owners tend to think this type of material damage is the worst that can happen. This line of thinking will land you in financial ruin should those sticky events arise.
Of course it is vital to cover your business (vehicles, stock, plant & machinery [equipment], building, etc.) against fire, theft, damage etc.
Most business owners are caught pants down when the following types of claims surfaces:
- Business interruption
Cover your overheads for an agreed period of time should your business come to a stand-still due to an insured peril. Example: You have a fire. The insurance investigation takes four months. They agree to pay the claim. Now the clearing of rubble can begin and it takes another 4 months to be back in production. Let’s ignore the client’s you lost and the time it will take to win back their business. For eight months you had to pay salaries and all the normal overheads.This insurance will pick up that bill. 80% of companies are under-insured on this section because brokers do not know how to calculate the correct insured amount. If you are under-insured here, you will get approximately 30% of your claim. You will lose your business.
- Products liability
The Consumer Protection Act dictates that everyone down the line (producer, wholesaler and retailer) can be held liable for damages suffered by the end user. From food & beverages, to tyres, to toys and soap….you are exposed. It does not matter if you imported your product from China or Pluto…you can and will be held liable if the end user suffered damages. These types of claims could run into the millions (if you have to recall your product or a number of people suffered the negative effects of your product).
- Add-on benefits (two examples of many)
a) Reinstatement of data | Your entire data base is lost. It will take the IT gurus’ days to recap all your data by hand and this exercise can run into tens of thousands.
b) Increased cost of working | You have to hire additional people or machinery to help you get back to full production or on track until your normal staff is able to cope or the replacement machinery you need/bought is being delivered. These additional expenses that you incurred can be a huge financial burden if you are not covered against it.
What does business insurance cost?
There is absolutely no way to give a standard answer here. You need someone to come to your business premises and do a full survey. This person/adviser needs to understand your business and clientele. He/she needs to understand exactly what your business is about, the market you cater for and the risks you are exposed to.
Only after a full inventory of your business was done and a full understanding of what you do is captured, can the broker begin to quote the market.
Do not expose your hard work and biggest asset to the risk of inadequate insurance. It just isn’t worth it.
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