A business owner, even with a small or medium sized business will have many insurance needs that are different from an ordinary homeowner. This article is not meant to be comprehensive but in today’s market, where many people try to save money by using online consumer insurance, it is easy for the business owner to overlook something and leave himself/herself open to uninsured losses. In my personal opinion every business owner needs to have a local business insurance broker or specialist. The consequences of not having the correct insurance in place can be catastrophic.
Although it is easy enough to obtain commercial quotes, business insurance may appear in many different forms. It ranges from PI (professional Indemnity) to a Business Owners Policy which is a form of general insurance for a business like a homeowners policy is for a house owner.
However, if a business owner does not have the right insurance policy with the correct amount of cover a sudden claim together with the associated legal expenses can put you out of business. So whether you are a one man contracting plumber, a store owner or have a small warehouse or factory you need to review your insurance situation at least once a year. Then you are able to arrange the necessary quotes so you can arrange the proper insurance policy cover to protect and safeguard your business and livelihood.
There are many types of business insurance that you might need a commercial quote for and always check your actual requirements with a professional insurance adviser. The list that follows is not exhaustive; always check your full needs with an insurance professional:
- Public liability covers any potential liability to a member of the public on your premises. It can also extend to product liability, if for example a customer is injured due to a faulty product.
- Asset insurance covers building, contents, inventory and work in progress for fire, theft and the major specified risks. If you are a shopkeeper you may need glass breakage and boarding-up insurance, to cover emergency repairs to your shop windows.
- Boiler insurance boiler and machinery equipment breakdown, usually relates to accidental damage claims that relate to plant and machinery owned by the business.
- Goods in transit insurance or marine insurance. This covers any goods that are being shipped to you or by you to customer or supplier. Although by tradition this is usually called marine insurance it relates to movement by any means of transport: land, sea or air. This can be a complex area especially if you are shipping goods to or from overseas destinations. Always check who is responsible for the insurance cover.
- Employers’ general liability covers any employee accident and disability cases. There is usually a basic legal requirement for all businesses to have a statutory minimum level of cover. Usually there are state or federal requirements that specify certain levels of cover. If you do not comply with these requirements there could potentially be serious consequences.
- Business interruption insurance. If you have a fire on your premises general insurance will cover the cost of the buildings, machinery and inventory. However business interruption insurance is intended to cover the costs of the business until it is up and running again. Sometimes this called ‘Gross Profit’ insurance or ‘increased costs of working’ cover.
- Trade credit insurance to protect you against customers failing to pay, a related area is Export Credit Guarantee Insurance for overseas sales. This is to cover bad debts. Usually this comes with fairly specific conditions as to which customers can be covered and up to what limit. For many small businesses this can be too expensive in relation to the amount of cover that is available. This and export credit insurance is a complex area and specialist advice should be obtained. If you are selling your products overseas it is usual to ask for payment in advance for smaller orders and for irrevocable confirmed letters of credit for larger shipments. Ask your commercial bank or local Chamber of Commerce about international trade payments and Export Credit Guarantee Insurance.
- Directors and officers insurance. If you are a corporation this is to cover the company for litigation that may happen due to something the directors or officers may or may not have done.
- Auto insurance. Depending on your type of business you may need commercial quotes and then an insurance policy for a variety of different vehicles. If you have articulated heavy goods vehicles you might also need to look at getting commercial quotes for trailers, especially if they are left unattended for any reason.
One other issue to keep in mind is that all commercial quotes and subsequent insurance policies usually come with conditions or endorsements that you must comply with for the cover to be operative. As an example with a policy to cover a shop or warehouse the insurance cover may specify the locks, metal grills, alarm system for theft cover and also a fire alarm and water sprinkler system for fire cover. Always make sure that you comply. Also if the values you need to insure increase during the year because of the seasonal nature of your business or because you are simply expanding declare any changes as quickly as possible to the insurance company.
As you can see business insurance is a vast subject and specialist help is advisable in sorting out all the commercial quotes and then arranging suitable business insurance cover.