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 Business Insurance.
Required and Desired
Employers Liability Public Liability Product Liability Professional Indemnity Key Man Cover Goods in Transit Business Interruption assets and equipment contents cover
 
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Some insurance is required by law - some by prudence.

With all the other expenses involved in setting up a business, it's tempting to have the minimum insurance required by law - insurance against risks to third parties.
However, it makes sense to get adequate insurance to avoid the risk of losing it all.
Business insurance is usually divided into three fields:

• Liabilities
• Property and buildings
• Business assets and equipment (contents cover) .

Employers Liability.

Once one employee is taken on it is required by law that the company takes out Employers Liability Insurance. The prescribed legal minimum is currently [2001] 10m of cover against bodily injury, illness or disease sustained in the course of employment.
More info is available in PDF format :
Employers’ Liability (Compulsory Insurance) Act 1969 A guide for employers (PDF)

Public Liability.

Definition:- Legal liability to pay damages consequent upon 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.
Limit of Indemnity is the maximum amount the insurance company will pay in the event of a claim being made. The limits are usually up to 5m but when working for another company, cover of £10m or more can be demanded.

Product Liability

Product Liability is your legal liability to pay damages consequent upon a defective product being used in the contract.
Products liability insurance is a little more specialist. Businesses that supply products to other businesses or the public, from software to machine tools, are at risk if a faulty product causes damage or injury.
Manufacturers of a product are usually at risk if things go wrong, but the liability can fall on a supplier if the maker of the product goes bust.

Professional Indemnity

Unfortunately, we live in litigious times. Businesses can be sued, rightly or wrongly, for vast damages over a range of complaints.
Professional indemnity 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 cover - in some cases it is compulsory. Anyone who supplies advice or services such as consultancy should consider professional indemnity.

Key Man Cover

Small firms depend heavily on a small number of key people. This cover cannot replace someone, but it can provide short-term financial help to reduce the impact.

Business Interruption

Even minor damage to your property could seriously disrupt your business leading to loss of income and extra expenses. Business interruption insurance will compensate for the short-fall in gross profit together with paying any increased working costs and extra accountants' fees incurred.

Goods in Transit

Goods in transit insurance covers goods against loss or damage while in your vehicle or when sent by carrier.

Property and Buildings

Buildings and contents can be insured against fire, lightning, explosion of gas and boilers used for domestic purposes without the addition of special perils such as explosion, riot, malicious damage, storm, flood, impact by aircraft, road and rail vehicles, escape of water from tanks or pipes and sprinkler leakage.
'All risks' insurance gives wider cover including any accidental damage or loss not specifically excluded. However 'all risks' will not cover wear and tear, electrical or mechanical breakdown and gradual deterioration which will be specifically stated in the policy document.
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)

Your stock should be insured for its cost price without profit.
Plant and business equipment can be insured on either a 'replacement as new' or an 'indemnity' basis. If indemnity is chosen, wear and tear will be taken into account when settling any claims.

Engineering insurance provides cover against electrical or mechanical breakdown for most machinery, including computers. By law, many items of plant such as boilers, lifts and lifting machinery must be inspected regularly by a qualified person. Insurers can arrange to provide this service.

Contents are usually covered against theft providing there has been forcible and violent entry to or exit from the premises. Damage to the building resulting from theft or attempted theft will also normally be covered.
Theft by employees is usually not covered - cover against employee dishonesty can be arranged by a sepatate policy.

Money insurance is on an 'all risks' basis and covers cash, cheques, postage stamps and certain other negotiable documents.
Different limits will apply to money on the premises in and out of business hours, in safes, at the homes of directors or employees and in transit. There may be requirements in the policy relating to safe keys and the method of transit.
Personal assault cover may be included, which will provide compensation for you or your employees following injury during theft or attempted theft of money.

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