Welcome back to our new series on business protection. If you missed part one, head over and give it a quick read now.
As we discussed in our previous post, most businesses have physical assets that need to be insured in case of damage or loss. These include premises, stock, equipment, tools and even money. Here are the basics types of insurance a business may need to ensure it is adequately covered:
Invariably, a business will operate from premises of some description, be it an office, a factory or a retail outlet.
A good, standard building insurance policy should offer insurance against damage caused by fire, floods, storms, lightning, vehicles, vandalism, explosions and riots.
It is possible for a business to choose an all risk policy. This will provide protection against any other sort of damage or loss mentioned in the policy, although it will not cover daily wear and tear, electrical failures or general deterioration.
Calculating the insurable value of a business building is not the same as simply placing a market value on it. The insurance should cover the cost of completely reconstructing the property. This is called reinstatement. To arrive at the reinstatement value of a building, a business should consult with a chartered surveyor in order to get an accurate figure.
If the property is rented rather than owned, the business should check with the landlord who is responsible for insuring the building before any lease is signed. This duty normally falls to the landlord.
Even if a business isn’t responsible for insuring its building, it will need to insure the contents such as computers, plant, equipment and stock.
There are usually two sorts of contents insurance: replacement as new and indemnity. With indemnity cover, the wear and tear to which the item has been subject is deducted when calculating a claim. But whether it is at full value or allowing for wear and usage, the policy must cover fire, flood and theft.
Business interruption insurance covers a company for any costs or loss of profits that arise from an event – fire or flood or major theft – that threatens to interrupt its ability to carry on trading. The costs should include having to relocate to temporary premises and renting emergency replacement equipment.
Next time, we’ll look at the additional types of cover your business may need, depending on the specific type of business.
Do you have appropriate business protection in place? If you’d like to discuss your existing provision and get an independent review with suggestions for insuring your business, get in touch with us or visit our financial services company website, KWFS.online.