Insure - you don't get caught out

Feb 11 2008 by Karen Dent, The Journal

AS a business owner you should consider the different types of general and commercial insurances available and how to assess what types of insurance you need.

If you have business premises, taking out a suitable insurance policy will ensure you are covered for damage from a variety of causes. While you should check the policy details carefully, most standard contracts will insure your premises for risks including fire and lightning, explosion, malicious damage, storms, floods and damage caused by vehicles. If you are a tenant, ask who is responsible for insuring the premises. Normally this is the landlord, the tenant being responsible for shop fronts.

Premises insurance only covers the physical building, so you will also need separate insurance cover for stock, machinery and contents. You have the choice of either replacement as new insurance or indemnity insurance. Many business owners choose indemnity cover, which deducts the cost of any wear and tear when settling a claim.

However, if you work from home, you may need a specialist insurance policy. Household insurance will not cover any loss of office equipment, nor will it provide public liability cover. Your standard household insurance may even be invalid if you work from home, although most household policies can be extended to cover this. You should also check the terms and conditions of your mortgage, as lenders often require to be informed if you use your home to operate a business.

When buying insurance, it is useful to get quotes from several different insurers or ask your broker to do so, compare the levels of cover, and talk to your broker about whether you need a policy tailored to your specific needs. Other factors to take into account:

What it will cover

Service

Cost

Whether there is a no-claims bonus

Level of excess.

It’s a good idea to seek professional advice from a regulated insurance company or broker. Insurance brokers and advisers are regulated by the Financial Services Authority. Select an insurance broker through the Institute of Insurance Brokers website www.iib-uk.com, or contact the inquiry line on (01933) 410003.