Setting up a new business involves so many expenses that it's always tempting to avoid paying the extra cost of insurance policies other than those required by law, such as coverage against liability or risks to third parties. But it is always wise to have your business covered against all potential financial losses or liabilities occurring as a result of unexpected events.
Your business insurance should cover:
â?¢ Property and buildings
â?¢ Business assets and equipment
Liabilities include your liability as an employer, public liability and product liability. If one of your employees suffers from a bodily injury, illness or disease sustained in the course of employment, you must provide for him. If you cause any damage to any third party in the course of business, you will have to pay for the damage. Similarly, if any of your products proves to be defective, you are legally liable to pay. So you must insure your business against all kinds of liabilities.
Employers' Liability Insurance
Employers' liability insurance is a compulsory insurance cover that all business owners must have. This insurance protects your business should one or more of your employees succumb to death or suffer bodily injury in the course of their employment, due to some negligence on the part of your organisation. This insurance is compulsory by law, and you must have adequate cover to protect your business against any such situations.
Public Liability Insurance
Public liability insurance is also a compulsory insurance cover for all businesses. It covers your business against events where your business causes death, damage or physical injury to a third party, and you then get sued. You must possess full cover against any such liabilities.
Professional Indemnity Insurance
This insurance is designed to protect firms providing services or advice to clients, such as accountants, IT consultants, etc. When you start a new business, you will have to insure your business against all liabilities according to the provisions of the Companies Act. But you might also have to pay out for some entirely unexpected events, such as being sued for damages whether you are responsible or not. For such situations you need Professional Indemnity cover, which provides protection against any legal action taken by your clients. In some cases, professional indemnity is compulsory, particularly if you are in service industry. You should get cover for compensation against such claims.
Insurance for Property and Buildings
Your business promises, buildings and contents should be insured against fire, lightning, explosions, burglary, and any natural calamities such as floods or tornados. Your insurance should cover all risks to your business, including any accidental damage or loss not specifically excluded in the contract. Your property and buildings should be covered for their entire repair or rebuilding costs, including all related costs such as engineers' fees or the cost of site clearance.
Insurance for Business assets and equipment
In the course of business you accumulate inventories including raw materials, unfinished or finished goods. All your business equipment and inventories should be insured against any loss or damage by accident or theft. This particular insurance has many clauses and divisions, so you should plan it carefully and take advice from a professional consultant. For example, you need to take special cover for goods lost in transit. Similarly, in many policies, contents are covered against theft from outsiders, but not from theft by employees, which requires a separate policy. Different policies will also have different limits on the amount of cash and valuables that are covered when left unattended at your property. To protect your mechanical or electrical devices against damage, you need to have an engineering insurance policy, and your insurer must provide for regular inspection of such machinery by a qualified person.
You should also think about cover for unexpected situations like personal assault, strike action, or key personnel leaving suddenly and thus disrupting your business activities. In the course of business you will face some difficult situations, and good business insurance covering all possible situations could be the difference between success and costly failure.
Author Vicky Morrisdate added 2009-08-25 14:50:15