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Business Insurance FAQ’s

Insurance Covers Explained

Asset Protection

Material Damage to Buildings, Contents and / or Stock – This is the cornerstone of any commercial insurance programme covering material assets.

Computers – Your buildings and contents policy may cover physical loss or damage to your computer equipment but it won’t cover many of the specific risks to which computers are subject, such as reinstatement of data, or incompatibility of records.  For these, you need specific computer extensions.

Terrorism – You may need specific terrorism cover for a number of reasons – for example:

• Buildings and contents policies do not automatically include cover for terrorism
• Public/Products/Employers liability may have separate lower limits for terrorism
• You may need cover for consequential losses caused by an act of terrorism.

Money – This covers accidental loss of cash and other negotiable and non-negotiable instruments.  It is usually an extension to a business policy.

Machinery – A business might find it difficult to continue trading at normal levels if a key item of machinery breaks down.  In such a situation, a machinery policy or extension covers business interruption, increased cost of working, repair and replacement.

Contract Works – Cover for work in progress, materials and plant in transit to and on contract sites.  Such policies can be extended to comply with the varying conditions imposed by JCT and other contract wordings.

Deterioration of Stock – Many things can interfere with the proper working of refrigeration equipment.  This in turn can lead to the loss or damage of frozen or chilled good.  This insurance pays for replacement of the damaged stock.

Dishonesty by Employees – This insurance provides indemnity arising from loss as a result of the dishonesty of an employee.

Financial Risks

Loss of rent – This is for owners of leased premises.  If the property becomes unusable because of a risk covered by the buildings policy, this compensates the owner for the consequent loss of rent.

Business interruption – Property insurance covers you for loss or damage to physical property.  But such a loss – say a fire – may also disrupt your ability to trade normally.  This can damage your business by, for example, reducing your turnover.  Business interruption insurance offers a variety of ways of protecting you in such a situation.

Loss of License – This covers licensees against the risks of loss of profit or sale value as a result of loss of licence.

Liabilities

Public Liability – Covers your legal liability to compensate people if they are injured or if their property is damaged as a result of your business activities.

Products Liability – Covers your legal liability to compensate people if they are injured or if their property is damaged because of products or services you provided to them.

Employers’ Liability – Covers your legal liability to compensate an employee if they are injured or fall ill at work.  By law, all employers must have this cover – even if the business is not actually trading.

Work away Liability – Most policies provide insurance cover for work at your own premises only.  This extension gives cover if you are working away from these premises.

Environmental Liability – If a pollutant leaks from your property, you are strictly liable for the damage it causes.  ‘Strict liability’ is a legal concept that means it doesn’t matter if the leak was your fault or not – you are still liable.  You can even be held responsible for pollution caused by a previous occupier of your premises.  This cover insures you against various pollution risks, including clean-up costs for your own site as well as liabilities to other people.

Product Recall – Covers you against the cost of recalling goods which may have a dangerous fault.

Product Contamination – Covers you against costs arising from accidental/malicious contamination or from product tamper and extortion.

Product Guarantee – Covers you against the cost of replacing faulty goods you supplied.

Financial Loss – Covers you when you are legally liable for someone’s pure financial loss: that is, they have not been injured, nor has their property been damaged – but they have lost money.

Cyber Liability – This is a relatively new class of insurance covering you against a long list of risks including negligent acts; errors and omission; breach of confidentiality; libel and slander; downloading of virus to third parties; infringement of third party copyright and liability arising out of data protection legislation; damage to your computer network; loss of revenue; and theft of money.

Pension Trustee’s Indemnity – The law imposes various responsibilities on the trustees of pension funds and they face the risks of claims for negligence or of breach of duty in the handling of funds.  This policy covers trustees against the costs and expenses incurred in defending such claims.

Goods in Transit

Inland – Covers you against the risk of loss or damage to your own goods while in transit – for example, for stock you send to customers or for your own mobile property.

Marine Cargo – If you import or export goods by sea, you should think about marine cargo insurance. As well as cover for goods moving by sea, you can get specific cover for goods moving internationally by air or by land.

Exhibitions – If you exhibit goods at trade shows and the like, this extension gives you cover for loss or damage to your goods while they are at the exhibition.  Normal goods in transit or contents policies do not cover such exhibition risks.

Management

Directors’ and Officers’ Liability – The law imposes various duties on the directors and officers of a business.  This insurance covers directors and officers against their legal liability for damages, out of court settlements, and legal expenses incurred in defending civil and criminal proceedings.  This is particularly relevant to the professional non-executive director who may be a director of a number of companies.

Employment Practices Liability – This covers you against legal liability arising from employment-related issues such as unfair dismissal, discrimination, harassment etc.

Intellectual Property – This covers the legal expenses of defending or pursuing a claim for infringement of copyright, trademark or registered design.

Legal Expenses – This insurance covers legal expenses for various types of court case including: contract disputes, property disputes, landlord and tenant disputes, licence and franchise disputes, nuisance actions, taxation proceedings and employment disputes.

Professional Indemnity – If you give expert advice, you are legally responsible for the accuracy and quality of that advice.  This insurance covers your legal liability to pay compensation to people when you give them poor advice which leads to their losing money.

Statutory Plant Inspection – To meet statutory requirements, engineers must regularly inspect certain items of plant.  This policy covers that cost.

Engineering – Plant is covered for physical loss or damage under normal material damage insurance.  But if you want to cover more specific risks for strategically important plant, such as breakdown, failure of utilities (electric, gas and water) and fragmentation, then you need engineering insurance.

Loss Recovery – If you suffer a loss, we are always ready to help you prepare the claim against insurers and manage it on your behalf.  But sometimes it makes sense for you to employ specialist loss adjusters who can make sure you get all the money you are entitled to.  This policy covers the cost of employing such adjusters.

Staff Protection

Group Personal Accident/illness – This insurance pays out a set amount if someone falls ill or is injured in an accident.  An individual can buy it for themselves or a company can buy it for the benefit of their employees.  The pay-out can be a lump sum or a weekly amount.

Business Travel – This covers employees while they travel on behalf of the company and otherwise.  It can cover medical expenses, personal accident, baggage and money; and it can cover the families of employees as well.

Motor

Motor Legal Expenses – This insurance covers the cost of recovering uninsured motor losses such as your policy excess and of employing a solicitor to handle any injury claims as a result of motor accidents.

Motor Gap Cover – Most motor insurers will only settle a total loss claim up to a maximum of the market value of the vehicle. In some cases, this may be significantly lower than the settlement figure you have to pay the lease company.  Gap cover bridges the gap between the two amounts.

Business Cars and Commercial Vehicles – This insurance provides the compulsory cover needed for company cars and vans.  It covers your legal liability to third parties; damage to or theft of your vehicles while they’re being used for business; social domestic and pleasure use, where requested; and, to a limited degree, cover for personal possessions in the vehicles.

Motor Trade Road Risks – This covers the same as business cars and commercial vehicles with optional additional covers such as use of customers’ vehicles, trade plates, and vehicles you have for sale or own for a temporary period.

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