Business insurance - protecting your business

Protecting your business and assets is sound business practice. It is important to choose the correct mix of Business Insurance policies at the right levels for your business to sufficiently cover the risks, satisfy the bank, and enable you to stay in business should something happen.

It is important to get your risk and business insurance mix right.

Appropriate, affordable business insurance coverage has to be relevant to the market that you operate in, the size of your business and the nature of your work. You will need to determine the correct balance between your business risk, and the level and amount of cover you need.

Business insurance is usually divided into four main categories: 
- Liability insurance 
- Property and buildings insurance 
- Business assets and equipment insurance (contents cover). 
- Motor insurance (van insurance and business car insurance) 

Liability insurance
Public Liability is a business or individuals legal liability to pay damages for bodily injury, illness or disease contracted by any other person, other than employees, or loss of or damage to their property caused by the insured. However, there has to be some proof of negligence against the company or individual 

Product liability insurance is your legal liability to pay damages consequent upon a defective product being used in the contract. Or where damage is caused to a person or third party by a product you have supplied. 

Professional indemnity insurance provides protection against any action by clients who believe they received bad or negligent services, and incurred a loss as a result. 

Most professional bodies have professional indemnity insurance cover - in some cases it is compulsory. Anyone who supplies advice or services such as consultancy should consider professional indemnity insurance. 

Property and Buildings Insurance
Buildings and contents can be insured against; fire, lightning, explosion of gas etc. Usually excluded are; riots, wear & tear, war & nuclear risks. 

The business premises should be insured for their full rebuilding cost (including professional fees and the cost of site clearance) and not just for their market value. You may need expert advice to calculate the rebuilding cost, which often differs significantly from market value. 

Business assets and equipment (contents cover)
Stock should be insured for cost price. Plant and business equipment can be insured on either a 'replacement’ as ‘new' or an 'indemnity' basis. Contents are usually covered against theft providing there has been forcible entry to or exit from the premises. Damage to the building resulting from theft or attempted theft will also normally be covered. 

Vehicle insurance
Comprehensive Vehicle insurance provides cover against loss or damage to your vehicle or its contents. 

Ensure you take out adequate business insurance and protect your business and assets.

For more on Business Insurance.

By Richard O'Brien - nzbizbuysell
 

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