So, you’re starting your business and now it’s time to consider how to protect it. Business insurance is probably a term you’ve read and provides a good starting point. It encapsulates insurances associated with a business, from equipment and machinery to vehicles and liabilities. Most commonly sold as a packaged product, with various sections for you to choose from. Each business is different and understanding how best to protect against various events can be tricky. Take the time to read and understand how a policy will respond or speak to a professional insurance broker who can help break down and explain the cover you need.
Insurance Broker
The time taken to try and understand what business insurance is best for you is time away from business. An insurance broker is a professional who will help review, explain, and provide options for your insurances. Partnering with an experienced insurance broker gives you the peace of mind your business is insured correctly and adequately.
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Business Package
This is exactly as it reads, a packaged product – It offers multiple sections of cover which would most commonly fit a small business, from property, theft, glass through to motor vehicle and management covers. Understanding how each section fits your business is the important part. For example, misunderstandings arise when property damage is selected, this will not cover theft or glass damage as these are insured separately. Have your insurance broker, break down each section to eliminate any risks. .
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New replacement value
What values should I select when setting up my insurance?
The purpose of the policy is to replace your assets if something happens, meaning the values you select need to reflect the current replacement value of the insured property. Often you might need to do some research or speak to professionals such as valuers to ensure this is correct. If the values are too low, you could be exposed to underinsurance. Be careful especially when buying second hand goods or older properties, you may pay much less than the value needed to correctly insure them.
Underinsurance
This can occur when your assets (buildings, contents, machinery etc) are insured for a value less than required to replace them. If a claim occurs the insurer will often review your insured values and compare that against the current replacement costs – if it’s decided these values are not sufficient, the underinsurance clause could be applied and only a portion of the claim paid out.
It is therefore very important to ensure your asset values are accurate and up to date.
Business Interruption
Business Interruption insurance is designed to protect your loss of revenue following an insured event. For example, if you’re running a café and a fire broke out forcing you to close for several months, this would protect the income until the business was back up and running. Business Interruption will have a maximum amount of time for which your loss of revenue will be covered, this is called the indemnity period. Also bear in mind, that for business interruption to cover your lost revenue, the event causing the damage needs, and the assets must also be covered under the policy.
If you are concerned about insuring your revenue, I would strongly recommend speaking to an insurance broker.