Every business has risks. Start by identifying the events that could interrupt trading, reduce income or create an unexpected bill, then decide how to reduce their likelihood and prepare for their consequences.
Look at dependencies
Consider how the business would cope if a key employee, customer or supplier were no longer available. Review stock requirements and how demand changes through the year.
Where ownership is shared, a partnership or shareholders’ agreement can help clarify what happens when circumstances change.
Your IT arrangements also deserve attention: system failures, malicious software and missing backups can disrupt everyday work. Review the recovery plan alongside any relevant insurance.
Match cover to the business
An insurance broker can help establish which policies and levels of cover suit your activities. Areas to discuss include:
- People: employers’ liability, key-person cover and protection against loss of income through inability to work.
- Claims: public and product liability, professional indemnity and directors’ and officers’ cover.
- Assets: buildings, stock, machinery, shopfront glass and goods in transit.
- Trading disruption: business interruption and credit insurance.
- Other exposures: employee dishonesty, legal expenses, business travel and working from home.
Employers’ liability insurance is normally compulsory when you become an employer, although exceptions exist. Check the GOV.UK guidance for your circumstances.
Understand what the policy covers
Insurance responds to the terms of the policy. Check the insured events, exclusions, limits and conditions rather than assuming the policy name covers every loss.
For buildings, discuss the rebuilding cost rather than simply using the property’s market value. For interruption cover, consider how the business would operate while recovering.
Keep the arrangements current
Changes in staff, stock, premises or activities can change the cover you need. Review insurance alongside your practical contingency plans so that both reflect the business as it operates now.