Small Business Plans, Small Business Insurance
Insurance can provide financial compensation and peace of mind when things go wrong. But small business insurance premiums can also represent a significant cost. You need to choose carefully which risks to insure against. This briefing explains: * The types of small business insurance cover a small business plans should consider taking out. How to buy small business insurance cost-effectively. How to get any claims settled promptly. 1st Compulsory Cover As soon as you start a small business, you have legal obligations to your employees, to your customers and to the general public. 1.1 All small businesses except those employing only close family or where the owner is the only employee must purchase employers’ liability insurance. This covers you against claims from employees for accidents or sickness they may suffer as a result of working for you. * By law you must have cover of £ 5m, though most policies now automatically provide £ 10m cover. * You must exhibit a Certificate of Employers’ Liability Insurance at each place of business - and keep it for 40 years. 1.2 You must have motor vehicles liability insurance. * All vehicles used on the road must be insured for third-party liability, at least. 2nd Optional Cover Most business risks can be insured against. Whether a particular type of cover is right for you will depend on your assessment of the risks and the nature and location of your business. There are several non-compulsory types of small business insurance cover you may want to consider. 2.1 Legal liability cover is more or less essential, though not required by law. * Public liability covers you against accidents to members of the public or damage to property that occurs as a result of your small business activities. It also covers any related legal costs. * Product liability covers you against injury or damage caused by faulty goods. This can be important if you manufacture, repair, install or even retail goods. 2.2 Property cover can be provided for specific risks (eg fire or flood) or, alternatively, for a wide range of risks in one package. * You should cover your contents, stock and fixtures. If you own your premises, you will need to insure the buildings too. * Claims for wear and tear and gradual deterioration are generally excluded. If you arrange cover on a ‘new for old’ basis, deductions for wear and tear will not be made from claims for risks which are insured, such as fire or theft. * Most policies automatically insure you for up to £ 100000 against terrorist attack. You will need to arrange extra small business insurance if your property and possessions exceed this replacement cost. * If you rent premises, ask to see the landlord’s insurance policy and check the range of protection that is in place. 2.3 Cover against theft by outsiders may be something you could leave for later, if your business does not involve expensive equipment or stock. * Insurers generally want to see a reasonable minimum standard of security. * Theft by employees is generally not covered, though this can be arranged through a separate ‘fidelity’ policy. 2.4 Professional indemnity cover protects you against your legal liability for losses suffered by your customers as a result of your negligent advice. * This small business insurance is legally required in certain professions, such as the law, accountancy and financial services. * It is common in other areas, such as management and computer consultancy, publishing, engineering and design. 2.5 Business interruption insurance compensates you for extra costs incurred and trading profits lost if your business suffers serious disruption after, say, a fire. This is also known as’ consequential loss’ insurance. * For example, a manufacturer might have to stop trading for six months while premises were rebuilt and re-equipped. * A travel agency that lost all its customer files and bookings might lose three months’ sales as a consequence. 2.6 Legal expenses insurance covers legal costs such as solicitors’ fees and court costs. * Many policies offer legal guidance via a telephone helpline. 2.7 You can use insurance to make your business less vulnerable to the illness or death of key employees. Small businesses are often dependent on one or two key members of staff. * ‘Key man’ insurance pays out in the event of the death of a nominated employee. * Income protection insurance schemes can be used to cover employees in the event of long-term sickness, paying their salaries during the period of incapacity. This relieves the business of the burden of paying for a sick employee. 2.8 Other, more specialised, small business insurance policies are available to provide cover for particular business situations. * Money policies cover you for loss of cash or cheques. Stores that hold large amounts of cash will need specially agreed limits. * ‘Goods in transit’ cover may be important if your products spend a long time in delivery vans or are especially vulnerable. Hauliers’ terms of trade usually place strict (and low) limits on the compensation they will pay. * Glass cover may be necessary for shop windows or any other fixed glass. * Different types of engineering policy are available for machinery, sometimes including both breakdown and statutory inspection cover. You may need to check that equipment that is used off-site is included. * Credit insurance can compensate for debtors who are unable to pay you. * Computer policies may cover you for breakdowns and for loss of information. * Private health policies may cover the costs of private medical treatment or pay a lump sum in the event of a ‘critical illness’. 3rd Home Workers’ Insurance A growing number of start-up businesses begin life in people’s homes. 3.1 Do not rely on your household insurance. * Ordinary household insurance policies will not usually cover business risks such as employers’, public, or product liability. 3.2 If you start working from home or using your car for business, your household and motor insurance may be invalidated. 3.3 Special ‘working from home’ policy packages start at about £ 125 per year. 4th Choosing an Insurer 4.1 Disputes in insurance can and do happen. Claims can be paid late, or not in full, or not at all * All general insurance companies should be authorised by the Financial Services Authority (FSA). Most are also members of the Association of British Insurers. Check an insurer is authorised by calling the FSA’s enquiry line (0845 606 1234) or visiting the website. 4.2 Shop around for advice and quotes. * Insurance brokers’ services are usually free. A good broker will search the market to obtain the best deal for you. * Banks and building societies can offer good value, but may be tied to selling insurance policies from just one company. * Get at least three quotes, to ensure you are being offered a competitive rate. * Be wary of cheap deals. Why are they cheap? What is not being insured? 5th Cover How Much? Take time to think clearly about the amount of cover you need. Over Insurance is a constant financial drain on your resources, while underinsurance can be fatal to your small business. 5.1 There are several principles to bear in mind when deciding how much cover to buy. * Buildings should be insured for their full rebuilding cost (not forgetting professional fees and the cost of site clearance) and not their market value. If your buildings are leased, check that the landlord has this type of cover in place. * Insure stock for its replacement cost price, without any addition for profit. * Plant and machinery should normally be insured on a ‘replacement as new’ basis. 5.2 If you pay for too little cover, the insurance company is entitled to reduce any claim by the percentage of underinsurance. * For example, suppose you insure your property, which has a full rebuilding cost of £ 75000, for only £ 50000th The insurer can reduce you make any claim by the same proportion - ie if you claimed for a genuine £ 3,000-worth of damage, you would only receive £ 2000. 5.3 Most insurance policies require the insured to pay an ‘excess’ or’ deductible ‘, covering the first part of any loss. * Make sure the excess on your policy is an appropriate amount. * You can often negotiate a big reduction in premiums by agreeing to a higher excess. 5.4 Some policies allow you to pay a lower annual premium for your cover if you build up a no-claims bonus over several years. * You may want to avoid making claims just above the excess, if they would lead to increased premiums in subsequent years. 6th Taking out a Policy 6.1 Select cover that matches your needs. * A combined policy, covering a suitable range of risks, is usually the best solution. * Policies can be tailored to the requirements of an individual business. 6.2 When filling in the proposal form, disclose anything that might be relevant, even if it is not specifically asked for. * Failure to disclose relevant facts might lead the insurer to treat your policy as invalid. 6.3 Insurers may demand improvements to the security of the premises before giving cover. For example, they may insist on a particular type of lock or quality of burglar alarm. * If you have a burglar alarm fitted by an approved installer, you may get a discount. Check that the fitters and the alarm system are acceptable to your insurers. 6.4 Once your proposal form is accepted, you will receive a policy. * Read the insurance policy document and make a note of any special conditions or exclusions (such as precautions to be taken when transporting cash). * Keep a copy of the policy (or at least the main details), somewhere off the premises. 6.5 Make a note of the policy renewal date. 7th Making a claim you have to make a claim, following a methodical procedure will ensure it is settled with a minimum of delay. 7.1 Ask your insurer for a claim form 7.2 Return the claim form, with at least two or three estimates for the work to be done. 7.3 Explain all the relevant circumstances surrounding the claim. * If an insurer discovers material facts have been held back, it can damage your claim. 7.4 Wait for the insurance business’s go-ahead before starting the work. * You may be given permission by phone to get urgent work done straight away (eg making the premises weathertight). 7.5 The insurance company may send a loss adjuster (an independent expert, paid for by the insurer) to check the damage or loss. 7.6 You can employ your own independent expert - a loss assessor - who will charge a fee, which you should agree beforehand. * A loss assessor needs to be involved from the very beginning. It is too late to engage one once you have received an offer from the insurer. * If you are using an insurance broker, resolving and settling claims is part of the service the broker should provide, at no extra cost to you.
Small business plans, Small Business Insurance
Insurance may be financial compensation and peace of mind, if something goes wrong. But insurance premiums can also be a significant cost advantages. You must choose carefully the risks to insure against. This briefing explains:
* The types of insurance cover a start-up companies should consider.
* How to buy insurance affordable.
* How do you get any claims speedily.
1st Mandatory Cover
Once you start a small business, you have legal obligations to your employees, your customers and the general public.
1.1 All companies, except those employed only close family or if the owner is the only employees must purchase employers’ liability insurance.
It is you against claims from employees for accidents or illness, they may suffer as a result of working for you.
* By law, you must cover of £ 5 million, although most policies now automatically offer £ 10m cover.
* You must issue a certificate of employers’ liability insurance at each place of business - and hold him for 40 years.
1.2 You must motor vehicles liability insurance.
* All vehicles on the streets must be insured for liability insurance, at least.
2nd Optional Cover
Most companies can be insured against risks.
Whether a certain type of coverage is right for you will depend on your assessment of the risks and the nature and location of your company.
There are several non-compulsory types of insurance coverage you should consider.
2.1 liability coverage is more or less substantial, although not legally required.
* General liability insurance covers you against accidents to members of the public or damage to property that occurs as a result of your small business. It also includes any related legal costs.
* Product liability covers you against injury or damage caused by defective goods. This can be important if the manufacture, repair, install or even retail goods.
2.2 Property cover for certain risks (such as fire or flood) or, alternatively, for a wide range of risks in one package.
* You should focus on your content, storage and installation. If your own premises, you must insure the buildings.
* Claims for wear and gradual deterioration are excluded. If you arrange cover on a “new for old” basis, the deductions for wear are not from claims for risks that are insured, such as fire or theft.
* Most policies automatically insure you for up to £ 100000 against terrorist attacks. You need to arrange additional insurance if your property and possession of the replacement cost.
* If you rent premises, ask the landlord to see the insurance policy and review the scope of protection is available.
2.3 protection against theft of outsiders may be something you could leave for later, when your company is not expensive equipment or stock.
* The insurers generally want to see a reasonable minimum standard of security.
* Theft by employees is usually not covered, although this may have a separate “loyalty”.
2.4 Professional liability insurance protects you from your legal liability for damage caused by your customers as a result of your negligent advice.
* This insurance is legally required in certain occupations, such as legal, accounting and financial services.
* It is in other areas, such as management and IT consulting, publishing, engineering and design.
2.5 business interruption insurance compensates you for additional costs and lost profit, if your company suffers serious disruption to, say, a fire.
This is also known as “consequential damages” insurance.
* For example, a manufacturer might have to trade for six months while the premises were rebuilt and refurbished.
* A travel agency, lost all his client files and reservations could lose three months of sales as a result.
2.6 legal expenses insurance covers legal expenses such as lawyers’ fees and court costs.
* Many policies provide legal guidance on a telephone helpline.
2.7 You can make your insurance company less susceptible to the illness or death of key employees. Small companies are often dependent on one or two key members of staff.
* ‘Key man “insurance pays in the event of the death of a worker nominated.
* Income insurance can be used to workers at the long-term illness, the payment of their salaries, during the incapacity. This relieves the business of the burden of payment for a sick employee.
2.8 Other, more specialized insurance to provide cover for certain business situations.
* Finance policy cover for the loss of cash or cheques. Operations in which large amounts of cash need specifically agreed limits.
* ‘Goods in transit “coverage may be important when your products spend a long time in vans or are particularly vulnerable. Forwarders’ terms of trade usually place strict (and low) limits for the compensation it pays.
* Glass cover may be necessary for shop window or any other fixed glass.
* There were different types of engineering policy for machines, sometimes both breakdown and statutory inspection cover. You may need to consider whether equipment that is used off-site is included.
* Credit Insurance can compensate for debtors are unable to pay.
* Computer policy may cover you for losses and the loss of information.
* Private health policy may cover the cost of private medical treatment or payment of a lump sum in the event of a “critical illness”.
3rd Home Workers’ Insurance
A growing number of start-up companies begin the lives of people in homes.
3.1 Do not rely on your household insurance.
* Annual household insurance policies are generally not cover commercial risks as the employer, public or product liability.
3.2 If you work from home or with your car for business, your household and motor insurance can be declared invalid.
3.3 Special ‘working from home “packages start at about £ 125 per year.
4th The selection of an insurer
4.1 disputes in the insurance and do happen. Claims can be paid late or not at all in their entirety or not at all.
* All general insurance companies should be authorised by the Financial Services Authority (FSA). Most of them are also members of the Association of British Insurers. Check an insurer is entitled to by calling the FSA inquiry line (0845 606 1234) or visit the website.
4.2 Shop around for advice and quotes.
* Insurance Brokers’ services are usually free. A good broker is looking for the market to get the best deal for you.
* Banks and building societies offer good value, but in conjunction with the sale of insurance policies from a single company.
* Get at least three bids to ensure they are offered a competitive rate.
* Be wary of cheap offers. Why are they cheap? What is not insured?
5th How much does it cover?
Take time to think clearly on the level of cover you need. Over Insurance is a permanent financial burden on your resources, while underinsurance can be fatal to your business.
5.1 There are several principles to consider when deciding how much coverage to buy.
* If the buildings insured for their full reconstruction costs (not to mention the fees and the cost of clearance) and not their market value. If your building is rented, whether the landlord has this kind of coverage.
* Insure camp for its replacement cost, without additional benefit.
* Plant and machinery should normally be assured of a “replacement as new” basis.
5.2 If you pay too little coverage, the insurance company is entitled to a claim by reducing the percentage of underinsurance.
* Assume that you insure your property, which has a full cost for the reconstruction of £ 75000, for only £ 50000th The insurer can make any claim by the same proportion - so if you claimed for a genuine £ 3,000-value of damage, you would receive only £ 2000.
5.3 Most insurance companies require that the insured pay a “surplus” or “deductible” for the first part of the losses.
* Make sure that the surplus in your policy is a reasonable amount.
* You can often a large decline in premiums by agreeing to a higher surplus.
5.4 Some measures you can pay a lower annual premium for the cover sheet, if you build a no-claims bonus over several years.
* You may want to avoid in the performance of claims slightly higher than the excess, if it would lead to higher premiums in subsequent years.
6th You want to conclude an agreement
6.1 Select cover to match your requirements.
* A combined policy, for an appropriate range of risks, is usually the best solution.
* The policy can be tailored to the needs of an individual company.
6.2 when filling in the form proposed disclose everything that could be relevant even if they are not explicitly required.
* Failure to comply with relevant facts disclose could lead the insurer to treat your policy as invalid.
6.3 insurer may require improvements to the security of the premises before he cover. For example, on a particular kind of lock or quality of the alarm system.
* If you have an alarm system installed by a licensed plumber, you can find a discount. Make sure that the fitters and the alarm system are acceptable to your insurer.
6.4 As soon as your proposal is accepted, you get a policy.
* Read the policy document and make a note of any special conditions or exceptions (such as precautions to be taken when the transport of cash).
* Keep a copy of the policy (or at least the main details), just outside the premises.
6.5 Note the political renewal.
7th A claim
You have to make a claim for a methodical process will ensure it is settled with a minimum of delay.
7.1 Ask your insurer for an application form.
7.2 Return the application form, with at least two or three estimates for the work to be done.
7.3 Explain all relevant circumstances relating to the claim.
* If an insurer discovered material facts were withheld, it may cause damage to your claim.
7.4 Wait until the insurance company’s go-ahead before the start of work.
* You can use the permit by phone to urgent work done immediately (for example, the premises weathertight).
7.5 The insurance company may appoint a loss adjuster (an independent expert from the insurers) to verify the damage or loss.
7.6 You can employ your own independent experts - a loss assessor - will be a fee, you should advance.
* A loss assessor must be involved from the beginning. It is too late, as soon as you have received an offer from the insurer.
* If you’re an small business insurance broker, resolution and settlement of claims is part of the service that the broker, without additional cost to you.
