The Different Types of Business Insurance

In the UK there are many different types of Business Insurance. It's because of this diversity that the options available can sometimes be confusing. So for a new business that has no staff or an existing enterprise with teams of employees it's important to decide what level of insurance you must have and those that are advisable.

Here is a list of 16 different types of Business Insurance you might consider.

Employers' Liability Insurance - The Employers' Liability (Compulsory Insurance) Act 1969 requires that employees be covered against injuries whilst doing their job - Mandatory.

Motor vehicle insurance - Most business policies are comprehensive or third party, fire and theft. Legally you must, at least, insure your legal liability for injury to others and damage to their property - Mandatory. If you use private vehicles for business use, make sure the relevant policy accounts for this.

Professional indemnity insurance - Protects businesses against injury, loss, or damage, arising from their professional negligence or that of their employees. Depending on your industry certain profession MUST have insurance, these include; architects, accountants, solicitors, surveyors, insurance brokers and financial advisers.

All of the following types of Business Insurance are recommended.

Business travel insurance - Some employees travel extensively around the world. Cover against delays, loss of life and injury; equipment and money is recommended.

Fidelity guarantees - If you are worried about dishonest employees Fidelity Insurance covers against loss of cash or stock.

Key Man insurance - Some businesses would cease to function properly without certain individuals. It's not uncommon to insure Directors and senior managers against the loss of income from death.

Premises insurance - Much like home insurance your business premises should be insured for the complete rebuilding cost.

There are two types standard and "all risks". Talk to your broker about what level of cover you might need.

Contents cover - If you business holds any type of stock you might consider business contents insurance.

Plant and business equipment - Much like contents insurance, you can insure your machinery or business equipment.

Goods in transit cover - This is a popular insurance if you are looking to dispatch high net worth items. The post office always asks the value of your item being sent. Goods in transit cover operates in the same way.

Engineering insurance - Engineering insurance covers against electrical or mechanical breakdown.

Business interruption insurance - The riots in London in 2011 resulted in claims for disruptions to your business. Claims for loss of income and expenses would be likely.

Public liability insurance - This is a very common policy that covers your business from damages to members of the public, either for death, injury or property damage.

Product liability insurance - If you sell a product you need to consider carefully whether that product may harm an individual due to defects or negligence in manufacture. If so, you need to talk through the risk with your legal adviser.

Pollution risk insurance - Pollution is taken very seriously by the Environment Agency. If your business is caught polluting the environment you could be liable and fined and forced to pay to clean it up.

Directors and officers insurance - Company directors and officers have specific duties and responsibilities, for which they can be held responsible. Directors and officers insurance provides cover for compensation and legal costs, if they are found to have inadvertently acted outside their terms of reference.

There are differences in the legislation depending on which part of the country you live in. If you live in Scotland or Northern Ireland you should check local laws.

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Cyber Liability and Data Breaches - How to Protect Your Business From Hackers, Viruses and Loss

Through the use of social media, cloud computing, email and databases, information can be transferred with a click of a button, and viewed by any number of people around the world in a matter of minutes. This is undoubtedly a quick and relatively cheap method of communicating with customers and marketing your company, until it goes wrong.

Cases of virus attacks, infringement of copyright, defamation or theft of customer and employee data have risen in the last few years, and these types of case continue to appear in the news on a regular basis, especially when the data breach is from a company we all know and trust such as Sony.

Sony Online Entertainment and the PlayStation Network

In April 2011 hackers stole the personal details of around 77 million users of the PlayStation Network, and an additional 25 million from the users of Sony Online Entertainment. This included data such as names, addresses, email addresses, phone numbers, and debit/credit card information. The cost of the investigation, cleanup, insurance and updates was estimated to be around £105 million - not including lawsuits.

However, it is not just huge international companies that experience expensive breaches. The number of attacks on small businesses (fewer than 100 employees) rose from 141 in 2009, to 761 in 2010.

In fact, it is difficult to find any business that isn't at risk of becoming a target, due to them owning at least one of the following:

A computer network Option of credit card transactions A database of personal information

And it is not just the risk of being hacked by a virus or a cyber criminal that can cause problems. More and more of us are accessing emails and databases on the move through laptops and smartphones, which can be easily lost meaning sensitive information could be accessed by a member of the public. And even if the data is not abused, the fact the information was lost in the first place counts as a security breach, with a potentially large cost.

Facts and Figures The average cost of a data breach in the UK is £1.75 million (2011) 31% of data breaches are due to malicious or criminal attacks Negligent employees or contractors caused 36% of breaches The number of attacks on small businesses (fewer than 100 employees) rose from 141 in 2009, to 761 in 2010

Although it isn't always possible to totally stop these breaches from occurring, it is possible to protect your business from the problems a breach may cause. Cyber Liability Insurance, also referred to as Internet Liability Insurance or Online Liability Insurance, protects against claims arising from:

Security breaches Misuse of company email Libellous content on the company website System damage caused by viruses or malware Financial loss caused by internet downtime, or failure of the company website

This provides specialist protection which is often not included in general liability policies, whilst minimising business interruption after a claim and protecting your business financially from costs such as cleanup, security updates and expensive lawsuits.

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Shop Insurance And Reading The Riot Act To Your Business Insurance Company

Having watched in horror at the riots and civil disturbances that spread like wildfire out of control across many British cities in 2011, many business men and women are left wondering if their premises and business property is covered under their existing business insurance policies.

In the UK many shopkeepers and tradespeople who lost their businesses and property in last years riots, have yet to be compensated from their insurers.

Due to fairly recent changes in UK riot law, introduced after the nationwide riots against the Thatcher Government in the early Nineteen Eighties, there appears to be some confusion amongst the authorities and the insurance companies as to how to interpret the law and consequently, who is ultimately responsible to pay for the loss.

The problem is one of defining when a civil disturbance becomes a riot and vice versa. Depending upon the status of the disturbance, it could be the insurance companies who are liable or the local police authority. This has in some cases caused distress to business people, in particular shop owners who lost property in the riots and are still awaiting compensation for their claims. Shops were the main target of the recent English riots, with extensive theft of high value goods. Arson also caused billions of pounds worth of fire damage to buildings and contents.

Riot and civil commotion insurance cover is a special peril that is included as standard in most commercial insurance business property packages such as shop insurance, pub insurance, restaurant insurance, hotel insurance and office insurance. it is also available as an optional peril choice or given as standard in all UK commercial combined insurance policies that could cover any high street risk.

Riot and the Law

An act of riot is now defined under English law in the Public Order Act of 1986 which became effective in 1987 and lasts until today.

For a riot to exist there has to be:

Where twelve or more persons gathered together who use or threaten to use unlawful violence for a common purpose and that the conduct of this group is such that would cause a person of reasonable firmness present at the scene to fear for his safety, each of the persons using unlawful violence is guilty of riot.

The law states that no person of reasonable fitness needs to be present at the scene, it is immaterial if only one of the group is using violence and that conduct can be inferred.

Riot carries a maximum sentence of ten years detention at Her Majesty's pleasure or a fine or both.

The Act also made it the cost of a riot the responsibility of the local police forces with the introduction of the Riot Damages Act. This law effectively means that riot is now a fundamental risk and sends a message to the police that if law and order in your area gets out of control, you will foot the bill.

Shop Insurance and Riots

Nearly all commercial property and business insurance policies designed for the retail trade and shopkeepers will contain provisions under the special perils section for material damage and loss, due to riot or civil commotion. This includes all shop insurance packages.

If a riot occurs and a shop suffers material damage, it is the responsibility of the property owner to file a claim with the insurance company within seven days for the loss. Insurance companies then have to file the claim with the local police authority involved and appoint assessors within a further seven days.

Problems arrive when losses are substantial and spread over large areas of the country and claims are reported or handled late. There are physically not enough staff at police stations to handle the flood of claims, which in the case of large shops and warehouses can be in the region of ten million pounds or more per claim.

Insurance companies are often reluctant to pay out in certain cases where they fear that they cannot pass the loss onto the police, and the onus to recover the costs of the losses then falls directly to the shop owner negotiating with the police authority.

Not all business property is covered by riot insurance. Business vans and motors need to be covered under a separate policy with a separate claims process.

Loss of Profits and Business interruption are not covered by riot under the Riot Damages Act and are not recoverable from the police. If a shop has been burnt down and trading losses occur it is worthwhile badgering the insurance company involved to try to recover some of the loss of profits, which may be covered.

All business people should check the existing business interruption section of their policy wordings and if in doubt contact their broker or insurance company to confirm current levels of riot cover.

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So Why Use a Business Insurance Broker, When You Can Go Direct?

Many big insurance underwriters of late have been advertising themselves as being cheaper, when a prospective insurance buyer buys directly from them. When news reports state that the Bank of England has to use its own funds to bail the out the British economy in a bid to avoid a second recession, many thrifty insurance buyers may be tempted to embark on such a cash saving exercise.

Research conducted by RiskHeads back in 2010, paints a very different picture however.

Survey respondents considered the following, in order of importance, to be the prime factors in influencing their insurance buying decision: cost, ease, speed and finally, peace of mind that everything is covered.

Where cost is involved, what many people do not know, is that Business Insurance Brokers actually receive preferential rates from insurance underwriters. Better rates, than those you are likely to receive when going directly to the underwriter. Why? Because when you go to a Business Insurance Broker, they have the time to consult with you on your specific business needs, so that they can then advise you on which policy is best suited to your business. As professionally trained, experienced people, Business Insurance Brokers are more likely to consider all of the eventualities that may befall your business when helping you choose a policy; this results in lower risk policies that still allow for a premium income. What's more, the Business Insurance Broker then takes responsibility for nurturing and maintaining the business relationship with the client whilst performing the role of a salesman, all of which is effort that the underwriter does not need to expend.

This ties in with the second most critical factor, ease. When assessing your business insurance policies, an experienced Business Insurance Broker can quickly identify areas where cover may need to be changed or improved. Where a lasting relationship is in place, these changes can all be handled quickly by the broker as they have greater knowledge of you and your business. If you go direct, the onus is on the buyer to know exactly what they want. The results of the research suggest that dealing with a Business Insurance Broker was much easier overall, where brokers were more proactive in communicating and following up on correspondence, where many direct enquiries to an underwriter were either forgotten or poorly managed. Why does this happen? Underwriters receive thousands of enquiries a day as a result of their marketing activity, business insurance brokers however emphasise a more personal service and have more time do deal with policy modifications and amendments.

Speed, the third most critical factor, was balanced. Online, direct insurance calculators often provided a swift quote, whereas brokers often took a little longer to provide personalised, follow up correspondence. Later on however, where policy holders wished to make adjustments to their cover, business insurance brokers were able to quickly make adjustments as they already had a clear picture of what the business required; whereas people who bought direct were usually required to submit lengthy paperwork and often found themselves caught up in loops at call centres, talking to people who had very little knowledge of insurance.

Where Business Insurance Brokers really shone however, was in their market knowledge and their ability to give clients 'peace of mind that everything is covered'. As it is in their interest to know the coverage of policies inside and out, they were far more efficient at cross checking policies and creating custom wordings to suit businesses' specific needs. Whereas the customer buying direct from the underwriter, had little knowledge and thus 'peace of mind that everything's covered' did not come easily to them; underwriters still rely too heavily on customers doing the research themselves.

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