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What is business insurance?
Business insurance is cover that protects you and your business from financial losses due to unexpected events and circumstances.
Running a business can be very rewarding, but it is a massive responsibility and comes with its own risks. It is important to understand all the financial risks involved and more importantly how to protect against them and in turn minimise their impact is something goes wrong
Hope for the best but plan for the worst – this is the key to success and sustainability. The most common mistake business owners make is that they believe that they are ‘invincible’ and that nothing will ever go wrong, and as much as it is a great attitude to have, you cannot rely on ‘luck’
Do I need business insurance?
If you are already running a business, then you should already have some form of commercial insurance in place such as trade insurance, public liability, professional indemnity, business premises and contents insurance.
However, some business owners are far less likely to insure the health, or the lives, of themselves and key people who keep their business running.
Could Your Business Survive the Loss of a Key Person?
If your business partner suddenly died, would the business have enough money to buy back the shares from their next of kin?
If you or a key person became critically ill, would there be enough funds to pay a replacement person to ensure the business is still performing while you recover? If the answer is no, you should consider business insurance as an essential.
How can business insurance help my business?
Business insurance can help by providing money for the :-
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Repayment of business debts
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Provision of funds to find and recruit specialist staff
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Purchasing of shares from a deceased business partner or director’s estate
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Save money on tax
What business insurance do I need?
There are fours different types of business protection insurance:
Shareholder Protection
This pays out a lump sum of money on the death of a shareholder which enables the remaining shareholders to buy back the shares from spouse or next of kin of the deceased (most company shareholders are not aware of the law in the UK that states that if a company shareholder dies then their shares are automatically passed on to their spouse or next of kin)
Key Person Protection
This pays out on the death or critical illness of a key worker within the business such as a top salesperson or senior manager – essentially a person within the business who is responsible for generating a major amount of the profit
Business Loan Protection
This pays out a lump sum on death or critical illness of a director, shareholder or partner and this money would then be used to pay off a specific loan or debt
Relevant Life Protection
This pays out a lump sum on death or critical illness to the spouse or next of kin of the director or shareholder and is paid through the business as a tax deductible expense
How to Understand the Terms of my Business Insurance Policy
The type of insurance you need are dependant on what you need to cover.
At The Insurance Helpline we can advise and arrange all types of business protection insurance as well as commercial insurance for premises or contents and public liability and professional indemnity insurance – so please get in touch and we will arrange an appointment to visit you and assess all of your business insurance needs.