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Wednesday, 08 July 2015 07:45

Mind The Gap In Your Business Insurance

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Who would you be lost without?  In the same way that we generally insure our houses and cars but not our lives, we as small business owners tend to insure the physical assets we consider to be vital to the continuity of our business (things like buildings, stock, machinery and equipment) but not the people who work for us.

Think about your “key” employees; they could be your product developers, sales people or the finance director. Whoever they are, these individuals possess the skills, experience and relationships that make your businesses work and the smaller the businesses the greater the knock on effect of their loss can be.

How would you cope if a key employee, manager or business owner was unable to work for a prolonged period or ever again?

The impact on your business might include:

  • Emotional impact on remaining staff
  • Increased workloads
  • Negative impact on morale
  • Increase in business debts
  • Disruption of development plans
  • Reduced income and/or profits
  • Loss of important contracts
  • Change of shareholder control
  • You cease to trade

The Business Protection Insurance Gap

According to figures from the Department for Business Innovation and Skills and UK reinsurer Swiss Re, only 2% of the 4.9m private sector business in the UK at the start of 2013 had sufficient business protection in place.

The UK currently has an uninsured gap of around £1.35 trillion for business protection covers including Key Person and Shareholder Protection – especially among limited companies and partnerships.

Take action

Wither you are a sole trader, partnership, limited liability partnership or limited company, time spent reviewing your partnership agreements, loan agreements and other commercial and financial contracts could be time well spent indeed.

By doing nothing you could be exposing yourself, your employees and your business to unnecessary risks because insurance protection is available.

  • Key person cover – helps finance the loss of income or profits you incur if a key employee dies or is critically or terminally ill as well as the cost of hiring temporary cover and a permanent replacement.
  • Loan protection insurance – helps pay outstanding amounts in the event of a loss of a guarantor.
  • Share protection insurance – helps directors buy the shares of a deceased shareholder, avoiding them passed to individuals with little or no interest in the business.

These covers, and others like them, don’t just provide a financial safety net they help maintain stability and buy you valuable time while you work things out.

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