Formalities
Arranging for appropriate insurance
Business insurance
The main kinds of business insurance are:
- Fire: To cover rebuilding costs, etc following a fire
- Burglary/theft: To replace stolen or damaged assets
- All risks: Coverage against loss of assets, however caused
- Public liability: Coverage against claims by members of the public
- Product liability: Coverage against loss relating to defective or dangerous products
- Employer’s liability: Coverage against claims from staff
- Motor insurance: Coverage against driving accidents.
Most insurance companies offer these (or some combination) in a single “Office” or “Business” policy, which is more cost-effective than separate policies for each.
Other areas for which you might consider the protection of insurance include:
- Legal fees protection
- Credit insurance
- Bad debt insurance
- Computer equipement and data
- Travel
- Goods in transit
- Patents
- Business interruption.
Since insurance companies rate risks differently, it is worth talking to an insurance broker, whose job is to find you the widest coverage at the lowest price. Ask whether you can reduce the premiums by paying an excess (just like motor insurance). Ask also whether the premiums can be paid over the year rather than all at the start.
People-related insurance
If the business is dependent on yourself, or one or two key staff, it is also a good idea to take out “keyman insurance” on these people. Then, if they die or are unable to work, the insurance company will pay a lump sum to help overcome the difficulty.
You may also want to look at life assurance (to provide “death-in-service” benefits), critical illness, permanent health insurance or medical expenses insurance (VHI/BUPA) for your staff. Here cost, and whether staff value the insurance, will be major factors.
Your own insurance
What insurance you take out on yourself depends on the risk you are willing to take, your budget and your family situation.
Look at the key risks:
- You could get sick and not be able to work: You need insurance to provide a replacement income (permanent health insurance)
- You could get sick or die and have no one to take over the running of the business for you: You need a replacement income plus enough extra to pay someone else to run your business (permanent health/critical illness/life assurance).
Talk to a life assurance broker about coverage against these risks.
Talk to him/her also about pensions.
Now move on to consider the other aspects of formalities:
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