The Basic Business Insurance Cover

While much of the cover under this section is straightforward you just might want to consider the following:

First we have to have a look at the type of policy you have. For commercial businesses a "commercial combined" policy is usually the order of the day. However there is often some confusion with shop and office policies. For example, if you manufacture and fit signs and you have either a shop or office policy, the chances are you have inappropriate cover. Make sure you take a look at the policy you have just to be on the safe side.

Insurance policies differ with different insurers, but in general the cover is very similar. Essentially there are two basic types of policy; "Fire, Perils, Theft and accidental Damage", which covers more or less what it says on the tin and is specific on the perils of such things as fire and storms. The alternative is an All Risks policy which basically gives you a small list of what isn't covered rather than what is. So what do you need to look out for?

Firstly - buildings, are you the owner? If you are it's generally straightforward. You must insure the buildings at a figure to "rebuild" the premises and not the sales value. There are a number of ways to calculate your own building sum insured, but you need to get it right and obtaining the services of a surveyor is the best way. If you have had a valuation for any reason, the surveyors who carried this out will be your first port of call.

Are you a tenant who insures the building on behalf of the landlord? If so, make sure your tenancy agreement makes you responsible for this. If it doesn't then you might just find that in the event of a large loss there are complications. Insurance covers an individual's financial interest in an item and if the reponsibility hasn't been moved to yu through the tenancy/lease agreement, it needs to be. A verbal agreement might just not be enough!

An interesting point to note on buildings is the cover. Check to see what cover the policy gives for "theft". Increasingly theives are targeting lead and other similar metals. Without the appropriate theft cover you may find that if someone takes your roof, cast iron external pipes etc, there is no cover, especially if there has been no forcible or violent entry to, or exit from, your premises.

If you are a tenant and you have improved the landlord's premises these will be classed as "tenants improvements". These might be in the form of additional security, shutters, bars etc or perhaps you have built an internal office within the unit. If the premises are subject to a loss your landlord's insurers will replace the structure belonging to the landlord, but not your offices or other items that you have added to the building.

As a tenant you will probably be responsible for the glass in the building. Most tenancy agreements make the tenant resposible. If the landlord is making you responsible through the agreement, make sure you have this cover under your policy. A single piece of glass won't cost you a fortune, however a number of large windows put through on a Saturday night plus the boarding up costs will, so beware - check your policy, glass cover is easily missed. Some policies will limit the amount of glass cover you have, so make sure this is adequate to cover all the glass, not just part of it.

Machinery and plant such as CNC machinery, routers, cutting equipment, workshop items etc need to be covered. The figure you need to insure for is the cost to replace the item on an "as new - like for like basis" but without betterment and NOT the cost to replace as is. To replace as is, is referred to as "indemnity cover" and can get quite complex. What it means is that in the event of a claim you would be paid out on the new basis, but excluding wear and tear, so unless you know what you are doing and can replace machinery easily, this could be a problem.

Don't lump hand tools in with this section, most insurance policies list them as a seperate item; these will include air tools, general power tools and the like, either way make sure that you have them covered as a specific item under the policy. Hand tools under a "material damage" section will be covered at the premises, but not away from the premises. If you take tools to an installation job and they get stolen there will be no cover, so this must be extended to include "away from the premises" under a specific "all risks" policy section.

Don't forget that your machinery and plant sum insured should include not just the item itself, but also any three-phase electrics, as these will not be considered as the building in the event of a loss.

Do you have a mezzanine floor? Make sure you are covering this correctly, by their very nature they could be removed from your premises if vacated. We generally like to specify these items seperately; there can be no mistaking them in the event of a loss.

Your policy may state sums insured for machinery plant fixtures and fittings, this will generally include all items on your premises other than: computers, electronic business machines, hand tools etc, as these generally come under a seperate section.

Computers will either be listed under their own heading or a completely different section altogether. Just make sure that the amount you state includes hardware including PC's, Mac's, Servers, as well as all cabling. Software can be an issue as well depending on your agreement with vendors. Computers and cover for these fall under specific sections, which can become quite complex and will be discussed in a later article.

Stock; don't forget that stock is raw material, work in progress and finished items ready for collection or fitting. Any metal is a target at the moment, particularly "non-ferrous" such as stainless steel - make sure that the amount of insurance cover you have reflects the value you have in storage.

Under most policies "Business Interruption" follows the material damage section, this is an important part of your business insurance and is one of the first areas to be dropped when premium savings are required. Dropping business interruption could be one of the worst decisions you could make. The follow up to the above material damage section is business interruption and will discuss the reasons why this cover is one of the essentials of business insurance.

In the event of a loss you need to have made sure that the "sum insured" you have represents the full replacement value of the items lost. If you have insured your machinery and plant for £50, 000 you wouldn't just be given £50, 000, it's not that simple. Many of you may have heard of an average clause; put simply if you insured an item for £50, 000 when the item has a replacement value of £100, 000, in the event of its loss you would only get £25, 000! As you can see getting your sum insured is essential.

One area that isn't the norm for most insurers is "customers vehicles". Make sure that the sum insured chosen for this section adequately covers the maximum that you would have at your premises at any one time. More in a further article.