Business Insurance and The Importance To Your Company
There is never a perfect time to discuss the importance of business insurance, particularly for busy organisations. With so many other priorities for company owners to focus on, the topic of business insurance always ends up at the bottom of the priority list.
There are many insurance products that are specifically designed to protect your company from unforeseen and potentially expensive outcomes and that is why it’s essential for organisations to have the right cover in place.
But it’s not always as simple as getting a quote and going with the first provider you stumble across. In fact, there are an array of policy types out there, and not all of them offer the same degree of cover. That’s why you need to understand exactly what you’re getting, which is why we’ve written a handy breakdown to help you.
Why is business insurance important?
The primary purpose of business insurance is to protect your company from unexpected and costly events. It is to make sure you’re financially comfortable from the fallout of any problems you might run into. These could be in the form of expensive legal fees, building repair costs resulting from fire or flood damage or recouping recruitment costs for the loss or critical illness of a key employee.
The simplest way to explain this is with an example. Imagine, for a moment, that someone is injured on your premises, perhaps due to uneven flagstones or wet flooring. Without business insurance, you could be faced with a ruinously expensive court claim – one which leaves your company with no case. With proper cover, however, these costs would be covered by your insurer, protecting you from financial injury and allowing you to continue trading as normal.
What type of business insurance do I need?
Every company should have appropriate business insurance, but understanding what type of cover you need can be complicated. That’s why many people find it helpful to speak to someone in the know before taking out a policy, such as an insurance adviser or broker.
These experts should be perfectly placed to assess your requirements, which will vary from company to company, but it’s still good to have a basic knowledge of a few key insurance products, and there are three in particular that we want to focus on.
The first of these is known as business life insurance. ‘Business life insurance’ is a generic term that’s used to encompass a certain type of policy – namely, one which adds an extra layer of protection in the event of a company experiencing an unexpected loss to its employees.
Three key products tend to be included in this, in order to protect not only business owners and their families, but employees too. These are: key man insurance, relevant life insurance, and shareholder/partnership insurance.
The former covers death or injury to key members of the business, so that if, for example, the main revenue generator was incapacitated, the resultant shortfall would be picked up by the insurer. Business partner/shareholder insurance works in a similar way, giving the surviving partner or shareholder the funds to buy out the remaining share of the business in such circumstances.
Relevant life insurance is similar to a death in service benefit, it is tax-efficient and paid for by the employer. The employee loved ones will receive a payout should an employee fall critically ill or pass away. Like business life insurance, professional indemnity insurance can be the saving grace of ventures who find themselves unexpectedly in trouble, although its function is quite different. Its purpose is to protect companies who offer professional advice or services from claims of negligence, so that should they find themselves facing a costly lawsuit, they needn’t foot the bill out of their own limited pockets.
Last but not least, there is liability insurance. Although these are not the only types of cover out there, all three are of the utmost importance to the average business. This type of policy protects against more general lawsuits that might be levied against a company – for example, if someone were to take you to court because they were injured on your premises. The insurer would cover any legal costs on your behalf, so that the financial future of your company is not placed in jeopardy.
When it comes to the future of your business, it’s your responsibility to safeguard it, and one of the simplest and most effective ways to do this is by having proper insurance cover in place. If you’re looking to renew or refine your policies, don’t push it to the bottom of your priorities as there is never the perfect time to do it. Get in touch with one of our expert advisers today who will not only save you money but also time by searching the best providers for your needs.