Some insurance
is required by law,
some by prudence. ...
With
all the other expenses involved in setting up a business, it's tempting
to have the minimum insurance required by law - insurance against
risks to third parties. However, it makes sense to get adequate
insurance to avoid the risk of losing it all. Business insurance
is usually divided into three fields:
•
Liabilities
• Property and buildings
• Business assets and equipment (contents cover) .
Employers
Liability.
Once
one employee is taken on it is required by law that the company
takes out Employers Liability Insurance. The prescribed legal minimum
is currently [2001] £10m of cover against bodily injury, illness
or disease sustained in the course of employment. Go
here for cost...
Public
Liability.
Definition:-
Legal liability to pay damages consequent upon bodily injury, illness
or disease contracted by any other person, other than employees,
or loss of or damage to their property caused by the insured.
Limit of Indemnity is the maximum amount the insurance company will
pay in the event of a claim being made. The limits are usually up
to £5m but when working for another company, cover of £10m or more
can be demanded. Go
here for cost...
Product Liability
Product
Liability is your legal liability to pay damages consequent upon
a defective product being used in the contract.
Products liability insurance is a little more specialist. Businesses
that supply products to other businesses or the public, from software
to machine tools, are at risk if a faulty product causes damage
or injury.
Manufacturers of a product are usually at risk if things go wrong,
but the liability can fall on a supplier if the maker of the product
goes bust.
Professional
Indemnity
Unfortunately,
we live in litigious times. Businesses can be sued, rightly or wrongly,
for vast damages over a range of complaints.
Professional indemnity provides protection against any action by
clients who believe they received bad or negligent services, and
incurred a loss as a result.
Most professional bodies have professional indemnity cover - in
some cases it is compulsory. Anyone who supplies advice or services
such as consultancy should consider professional indemnity.
Key
Man Cover
Small
firms depend heavily on a small number of key people. This cover
cannot replace someone, but it can provide short-term financial
help to reduce the impact.
Business
Interruption
Even
minor damage to your property could seriously disrupt your business
leading to loss of income and extra expenses. Business interruption
insurance will compensate for the shortfall in gross profit together
with paying any increased working costs and extra accountants’ fees
incurred.
Goods
in Transit
Goods
in transit insurance covers goods against loss or damage while in
your vehicle or when sent by carrier.
Property and Buildings
Buildings
and contents can be insured against fire, lightning, explosion of
gas and boilers used for domestic purposes without the addition
of special perils such as explosion, riot, malicious damage, storm,
flood, impact by aircraft, road and rail vehicles, escape of water
from tanks or pipes and sprinkler leakage.
'All risks' insurance gives wider cover including any accidental
damage or loss not specifically excluded. However 'all risks' will
not cover wear and tear, electrical or mechanical breakdown and
gradual deterioration which will be specifically stated in the policy
document.
The business premises should be insured for their full rebuilding
cost (including professional fees and the cost of site clearance)
and not just for their market value. You may need expert advice
to calculate the rebuilding cost, which often differs significantly
from market value.
Business
assets and equipment (contents cover)
Your
stock should be insured for its cost price without profit.
Plant and business equipment can be insured on either a 'replacement
as new' or an 'indemnity' basis. If indemnity is chosen, wear and
tear will be taken into account when settling any claims.
Engineering
insurance provides cover against electrical or mechanical breakdown
for most machinery, including computers. By law, many items of plant
such as boilers, lifts and lifting machinery must be inspected regularly
by a qualified person. Insurers can arrange to provide this service.
Contents
are usually covered against theft providing there has been forcible
and violent entry to or exit from the premises. Damage to the building
resulting from theft or attempted theft will also normally be covered.
Theft by employees is usually not covered – cover against employee
dishonesty can be arranged by a separate policy.
Money
insurance is on an 'all risks' basis and covers cash, cheques, postage
stamps and certain other negotiable documents.
Different limits will apply to money on the premises in and out
of business hours, in safes, at the homes of directors or employees
and in transit. There may be requirements in the policy relating
to safe keys and the method of transit.
Personal assault cover may be included, which will provide compensation
for you or your employees following injury during theft or attempted
theft of money.
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