The Importance of Protecting Property with an Insurance Policy for Your Small Business

Running a small business requires the investment of money, time, talent and energy; therefore getting the basics right is imperative to the success of your business venture. The appropriate business insurance will help you and your company to manage your risks, and be able to claim for losses in the unfortunate event that things go wrong.

The recent floods that hit the UK are a great example of the necessity of having a safety net. Thousands of businesses were affected by the floods, through physical damage to their properties, to the affects that the floods had on trading during the months afterwards. Although it caused severe damage and extensive inconvenience, businesses were able to claim on their insurance, pay for the costs of damage, and begin to rebuild their businesses. Without it, it could have easily been the end for many.

Of course, there are many other incidents that can have a devastating effect on businesses; from robberies and theft, to fires and other disasters. Businesses also have a financial obligation to provide their employees and customers with compensation when necessary, and for the majority of businesses, this is only possible though their insurance policies.

The Importance of Buildings Insurance
If, for example, your business were to suffer from damage caused by fire, flooding, or lightning, buildings insurance would pay for the damage. Advice for the Association of British Insurers suggests: “You should insure your business premises for the full cost of rebuilding them including professional fees and the cost of clearing the site, which will often be very different from the market value. You should check whether your building is likely to be affected by subsidence. If somebody else owns the building your business is in, you should check with the owner that the building is insured. If you work from home, you should make sure your home insurance covers your business activities.”

The Importance of Contents Insurance
Contents insurance covers damage to and theft of stock and business equipment. The ABI advises insuring stock for cost price, without adding any amount for profit. There are two ways to insure business equipment; one is based on ‘indemnity’ and the other ‘replacement as new’. It’s your choice which cover you go for, and there are key differences between them. For indemnity, the insurance company will factor in wear and tear, and this will be reflected in the settlement of claims. ‘Replacement as new’, on the other hand, will mean that your insurance company is obliged to replace an item that can’t be repaired with a new one. In the event of damage or theft, the insurance company will also provide a new piece of equipment.

Business Interruption Insurance
Another option to consider for your business insurance is business interruption insurance. This will cover you for periods of time when your business cannot trade as usual due to an event resulting in damage to property on your premises. This may include instances where a machine breaks down, or flooding. This type of insurance will pay out in order to cover the shortfall in profit that your business will suffer, and also pay for the rise in costs of running the business as a result of the event. Business interruption insurance is a really useful type of insurance, and is usually offered as an extra with contents and buildings insurance.
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