business insurance frequently asked questions

DO I NEED TO TELL THE INSURERS EVERTHING ABOUT MY BUSINESS?
Your Insurers need to be aware of all the facets of your business in order to asses the risk and meet the needs and demands of your insurance requirements to ensure you are fully protected. Failure to advise your insurers of a material fact could invalidate your cover.
WHY DO I HAVE TO REVEAL MY WAGE ROLE?
 Your Insurers need this information assess the size of your company and the potential liability you may have to other parties.
DO I HAVE TO INSURE MY LANDLORDS PROPERTY?
 This depends on the terms of your lease. If the landlord assumes responsibility for the insurance of the buildings you occupy then you do not need to insure these yourself. However you should ascertain exactly what the lease specifies. If for example you lease makes you responsible for the insurance of existing fixtures and fittings shop fronts etc then you must insure these. You will no doubt decorate and improve the risk with your own fittings these must also be insured as the landlord will not insure them.
DO I REALLY NEED PUBLIC LIABILITY INSURANCE?
 In this litigious age every business needs to protect itself from claims from third parties for damage to the their property or for injury. The cover will protect the business from claims dealing with the legal costs and if necessary paying the damages awarded. Even defending a no win no fee attempted claim costs can run into thousands of pounds, which this cover will provide for.
I PUT UP DISCLAIMER SIGNS AND HAVE PEOPLE SIGN DISCLAIMERS SO DO I NEED LIABILITY COVER?
 Unfortunately yes. Signs may dissuade some claims but in law they have very little sway. The person injured may be blind or illiterate so cannot read the signs. They may well still attempt a claim even if they have signed a waiver on the basis that they did not know what they were signing and this claim would need to be defended.
I ONLY EMPLOY MY FAMILY DO I HAVE TO HAVE EMPLOYERS LIABILITY COVER?
 The Employers Liability Act 1969 does exempt family members from cover but if you trade as a limited company then you are legally required to have cover as per the Act.
I DO NOT HAVE MUCH STOCK SO CAN I ONLY INSURE MY LIABILITES?
 Yes of course but in protecting your business and continuing to trade you must consider the other aspects of cover that most business insurances provide, business interruption (loss of profits) money cover damage to fixtures and fittings leased equipment which under the terms of most leases you are liable for.
I SELL PRODUCTS TO THE PUBLIC, IF THEY CAUSE INJURY DUE TO SOME DEFECT BEYOND MY CONTROL AM I INSURED?
Public Liability policies can include liability arising from products supplied.

WILL MY PUBLIC LIABILITY POLICY COVER CLAIMS AGAINST ME FOR ERRORS AND OMISSIONS OR DEFECTIVE WORKMANSHIP?
 A public liability policy will only cover injury to the public or damage to their property caused by negligent acts.  Errors or Omissions such as wrongful advice is protected by professional indemnity insurance. With regard to defective workmanship, a public liability policy is not a guarantee that you know how to carry out your trade so defective workmanship is excluded.
CAN I INSURE MY VAN AS A PRIVATE CAR ALTHOUGH I USE IT FOR MY BUSINESS?
 Although the taxation class for the van is the same as a car private light goods, the use of the vehicle is very different. A van is carrying goods and this is not covered under a private car wording, indeed most insurers will restrict use on a van to pleasure use under a private car policy. If the vehicle is insured under a commercial vehicle policy the policy wording allows for pleasure use and the carriage of goods so full cover is available and the vehicle is properly insured.
WHY DOES MY BUSINESS POLICY RESTRICT THEFT COVER TO THEFT BY FORCIBLE AND OR VIOLENT MEANS?
 As you can imagine if the public are allowed unlimited access to business premises such as shop office hotels etc then theft if very easy for the opportunist thieve so some restrictions have to be imposed hence the requirement for forcible entry.
DO INSURERS ALLOW DISCOUNTS FOR GOOD SECURITY HOUSEKEEPING AND HEALTH AND SAFETY POLICY?
 These factors are taken into account when rating a risk by an insurer and allowed for accordingly but if must be remembered that an insurer will expect a risk to be well managed and comply with required aspects such as a written health and safety policy.


WHAT DOES ALL THE JARGON USED IN INSURANCE MEAN?
In the Insurance word many words are used in the policy documents or in the setting up or operation of the policy many are confusing so this following list is provided to assist in understanding what they mean. (This list was produces in association with the British Insurance Brokers Association.)

ADDITIONAL PREMIUM
A further premium payable by the insured as a result of policy amendment, which may have increased the risk or changed the policy conditions or sum insured.

ABANDONMENT OF EVENTS
A contingency insurance protecting promoters of events (e.g. exhibitions, fetes) against financial loss following cancellation, abandonment, interruption, rescheduling, postponement through circumstances (fires, storms) beyond their control. Judicial intervention that causes abandonment is sometimes included in the cover. Non-appearance cover is also available.

ACCIDENTAL DAMAGE COVER
Cover under a household or a commercial policy that provides all the benefits of standard named peril policy plus accidental damage cover, e.g. spilling paint on a carpet or computer. Under a named peril policy a loss has to be matched to a named peril.

ADJUSTER
One who investigates and assesses claims on behalf of insurers (claims adjuster or loss adjuster).

ADVANCE PROFITS INSURANCE
Business interruption insurance of the expected profits of a new enterprise or an extension to an existing business.

AGGREGATE LIMIT OF INDEMNITY
The maximum amount an insurer will pay under a policy in respect of all accumulated claims arising within a specified period of insurance.

ALL RISKS
A term describing a property insurance covering any fortuitous loss or damage that is not specifically excluded. This contrasts with a policy covering physical loss or damage caused by a named peril, e.g. fire. The 'all risks' exclusions relate to inevitable forms of loss, such as depreciation and wear and tear, and other losses due to gradually operating causes. 'All risks' cover is available for personal possessions, cameras, jewellery, industrial equipment and goods in transit, and applies to Institute Cargo Clauses A. Under household and commercial policies on buildings and contents, and cover on motor vehicles, the term has given way to 'accidental loss or damage' as a means of going beyond named perils cover.

AVERAGE
A clause in insurance policies whereby, in the event of under-insurance, the claim paid out by the insurer is restricted to the same proportion of the loss as the sum insured under the policy bears to the total value of the insured item.

BOAT INSURANCE
Most policies cover physical damage to the hull, sails, machinery, furniture, and most other equipment that is normally used on board. Most perils are covered including vandalism, malicious mischief, and even damage those results from latent defects of workmanship.

BUILDINGS INSURANCE
This covers your property against damage. This normally includes fire, flood and subsidence damage, temporary accommodation / housing, and the cost of replacing broken or lost keys. Outside buildings such as garages, greenhouses and sheds are often also covered.

Fixed items such as baths, toilets, sinks, pipes and drains are also covered by the majority of policies.

Some policies have options to include accidental damage cover, and to raise the excess (Initial amount you need to pay in the event of a claim) to reduce the policy cost.

BUSINESS INTERRUPTION INSURANCE
 Covers loss of gross profit following reduced turnover resulting from, and occurring after, insured property damage. The gross profit indemnity enables the business to pay its standing charges, including payroll, and recover its net profit during the indemnity period, the period selected as being the time needed to restore normal trading levels. Specified working expenses are not at risk and are therefore deducted from turnover before arriving at the gross profit, the item to be insured. The policy also covers increased cost of working, e.g. renting alternative premises, subject to the cost not exceeding the amount of loss thereby avoided. Additional increased cost of working can be insured. The policy may extend to interruptions caused by damage at the premises to customers or suppliers, or resulting from loss of attractions, murder, suicide, food poisoning or infectious/contagious diseases.


BUSINESS TRAVEL INSURANCE
This covers you against the loss or damage of business equipment such as laptops and product samples. This often also covers the costs of an emergency courier to deliver replacement items if needed (say, for an important meeting). Some policies also provide cover against the death or hospitalisation of an employee on a business trip, covering the costs for a colleague to take their place.

CANCELLATION

Termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the condition under which the policy may be cancelled by notice. The period of notice could be anything from 48 hours to 3 months. In most cases this will result in a return premium being paid by the insurer to the insured.

CARAVAN INSURANCE
Caravans represent a major financial investment, an investment that you need to protect against loss from, accident, fire and theft. You also need third party liability indemnity insurance to protect yourself against claims made by others.

CARGO
Covers manufacturers and suppliers with domestic and/or international risk exposures arising from the movement of their goods. Worldwide cover is available for import, export, inland transit and stock throughput risks.

CLAIMS
Injury or loss to the insured arising so as to cause liability to the insurer under a policy it has issued.

COMBINED LIABILITY POLICY
Policy combining two or more types of liability insurance in one document, e.g. public liability, products liability and employers' liability.

COMMERCIAL COMBINED
Covers accidental loss, destruction or damage to the property, except as excluded (e.g. faulty or defective design, inherent vice, latent defects, explosion of boilers, sonic bangs, collapse and others that may be applicable in real terms to certain categories of equipment). Many of the exclusions can be bought back. The property insured is industrial and commercial plant and equipment. Cover is often arranged on a first loss basis.

COMMERCIAL HULL AND LIABILITY
Covers work boats, port craft, barges, pontoons, tugs, dredgers, passenger and/or goods carrying vehicles, marine property, inshore fishing vessels, ship builders, ship repairers and marina operators. Cover is tailored to individual risk requirements.

COMMERCIAL LEGAL EXPENSES

Provides businesses with legal advice and covers legal expenses to enforce or defend legal rights in a range of disputes. Cover is available under various sections: court attendance expenses; tax/VAT disputes; prosecution defence; data protection liability; contract disputes; personal injury or property claims; premises disputes; employment disputes and awards; licence disputes.

COMMERCIAL VEHICLE INSURANCE
A general term referring to the insurance of goods-carrying vehicles, buses and coaches, agricultural and forestry vehicles, mobile plant and other special types.

COMMON LAW
The common law consists of the ancient customs and usages of the land, which have been recognised by the courts and given the force of law. It is in itself a complex system of law, both civil and criminal, although it is greatly modified and extended by statute law and equity. It is unwritten, and has come down in the recorded judgements of judges who for hundreds of years have interpreted it.

COMMUNITY COMPANY
An insurance company whose head office is in a member State of the European Economic Community.

COMPREHENSIVE
A term describing a policy with a number of different types of cover in one document (e.g. a private car comprehensive policy has sections providing material damage cover, third party cover, personal accident cover, medical expenses, etc.).

COMPUTER INSURANCE
Covers 'all risks', theft and breakdown included, on computer and ancillary equipment. Chips and standard software are included automatically. Other key features: 'new for old' settlements; cover in UK premises and in transit; negotiable excesses; loss of data; Data Protection Act liability; and consequential loss following an insured breakdown or loss. Liability insurance may be included. Exclusions are minimal but special precautions have to be taken when computer equipment is left in an unattended vehicle. Policies may apply to personal computers, laptops and main-frame systems.

CONCEALMENT
Deliberate suppression by a proposer for insurance of a material fact relating to the risk, usually making the contract null and void.

CONSEQUENTIAL LOSS
The term, unless defined in a contract, follows the rule for contractual damages and embraces losses flowing directly from the breach, e.g. late delivery that increases costs. Consequential losses are generally regarded as the more remote consequences that were not reasonably foreseeable by the parties. Contracts that define consequential are more likely to limit a person's rights than a clause that simply excludes liability for consequential loss without definition. In insurance the term is used to refer to expenses such as the cost of temporary relocation, while fire damaged property is being repaired. The term 'consequential loss insurance' has been replaced by 'business interruption insurance'. Consequential loss is not covered under material damage insurances.

CONTENTS INSURANCE
This covers the contents of your home against damage or loss due to fire, lightning, flooding, theft or break-in. Accidental damage is sometimes included, although it is usually an optional extra.

Contents Insurance is often sold together with Buildings Insurance, or as a single Home Insurance policy.

Remember that if you have a home office, it is not covered by your standard buildings/contents insurance, and a special policy will need to be bought.


CONTINGENCY INSURANCES
A term describing those policies that do not fall naturally into one of the principal classes of insurance business. The term embraces insurances such as abandonment of events, pluvius insurance and others often of an unusual nature.

CONTRACTORS' PLANT POLICY
Renewable cover for contractors who own, hire-in or hire-out plant (mobile plant, machinery and equipment) against unforeseen and accidental physical loss due to external causes; internal causes such as breakdown and wear and tear are excluded. The policy operates whilst at work or at rest or during dismantling or erection, loading, unloading or transit. For hired-in plant the cover includes legal liability for negligent breakdown and continuing hire charges. For hired-out plant the cover can be extended to indemnify the hirer. Cover can be arranged as a part of a contract works policy or, in some cases, motor insurance as special types.

CONTRACT WORKS/CONTRACTORS' ALL RISKS INSURANCE (Annual or single project)
Covers temporary and permanent works executed in the performance of contracts, and materials for incorporation therein, plus own and hired plant, and tools and equipment while on sites or in transit. Cover is arranged for house extensions through to multi-storey office blocks. Premiums are based on annual turnover with a maximum value of any one contract. Various extensions are available (e.g. continuing hire charges following plant damage). Key exclusions relate to existing structures and defective design. Cover may have to accord with standard term contracts (e.g. Joint Contract Tribunal).

COVER NOTE
A document issued to the insured confirming details of the insurance cover placed. Some cover notes are a legal requirement, e.g. motor.

CREDIT INSURANCE
This protects you against customers who fail to pay their invoices. Because the risk of bad debt can be high, you would probably find it hard to get cover for this unless your business has been successfully up and running for some time.

DEDUCTIBLE
The specified amount a loss must exceed before a claim is payable. Only the amount which is in excess of the deductible is recoverable.

DEFERRED PREMIUM
The part of a premium which, following agreement with underwriters, is payable by installments, usually quarterly or half yearly.

DETERIORATION OF FREEZER CONTENTS (Household)
Insurance of stock stored in a freezer and/or refrigerator against the risk of loss through deterioration following: (a) breakdown of plant; (b) non-operation of thermostatic or automatic controlling devices; (c) action of escaping refrigerant fumes from any cause; or (d) failure of the public electricity supply.

DETERIORATION OF STOCK
Engineering insurance covering damage to perishable stock in cold stores directly consequent upon an accident to cooling or climatising equipment insured under a machinery breakdown policy. The widest form of cover insures loss caused by any rise or fall in temperature.

EMPLOYERS LIABILITY INSURANCE
Insurance by employers in respect of their liability to employees for injury or disease arising out of and in the course of their employment. With some exemptions this insurance is compulsory in Great Britain, and can only be provided by an authorised insurer.

ENDORSEMENT
Documentary evidence of a change in the wording of or cover offered by an existing policy or qualification of wording if the policy is written on restricted terms. (See also Addendum).

ENGINEERING INTERRUPTION
A business interruption insurance providing an indemnity at a fixed rate per day in respect of interruptions following breakdown or unforeseen damage to installed plant and machinery or failure of the power or water supply. There are time excesses/deductibles or franchises applied to the indemnity period to avoid small losses, particularly temporary losses of services.

EXCESS
The first portion of a loss or claim, which is borne by the insured. An excess can be either voluntary to obtain premium benefit or imposed for underwriting reasons.

EXCESS LAYER
A layer of insurance cover provided by an insurer that sits above the primary layer. The liability of the insurer providing the additional layer is only triggered when the existing primary layer (plus any other layers already in place) has been exhausted. The 'layer' insurer provides a band of cover, commonly in liability insurance, by setting an upper limit of liability.

EXCLUSION
A provision in a policy that excludes the insurer's liability in certain circumstances or for specified types of loss.

EX-GRATIA PAYMENT
A payment made by an insurer to a policyholder where there is no legal liability so to pay.

FAMILY LEGAL PROTECTION
This covers you against legal costs in the event of you being involved in a court case. This usually includes (amongst other areas) cover against contract disputes, personal injury claims, employment disputes, and jury service.

When you join a Family Legal Protection policy, many insurers will also then allow you access to free legal help and advice.


FIDELITY INSURANCE
This covers you for fraud or dishonesty by employees, it can be taken out for any amount of employees or the whole staff.

FIRE AND THEFT COVER

Named peril 'own damage' cover added to a third party motor vehicle. The property damage cover is against damage caused by fire and theft risks only. The cover could stand alone if the vehicle is out of use.

FIRE INSURANCE POLICY
A material damage insurance that in its 'standard' form covers destruction or damage to the insured property by (1) fire (resulting from explosion or otherwise) not occasioned by or happening through (a) its own spontaneous fermentation or heating or its undergoing any process involving the application of heat, (b) earthquake, subterranean fire, riot, civil commotion etc.; (2) lightning; and (3) explosion, not occasioned by or happening through any of the perils specified in (1) above, (i) of boilers used for domestic purposes only, (ii) in a building not being part of any gas works, of gas used for domestic purposes or used for lighting or heating of the building.

FIRST LOSS INSURANCE
Insurance where the sum insured is accepted to be less than the value of the property but the insurer undertakes to pay claims up to the sum insured, without application of average.

FLEET INSURANCE
Policy on a number of vehicles operated by the same insured and rated on an experience basis, i.e. fleet rating. Usually five or more vehicles constitute a fleet. The fleet itself can comprise vehicles of different classes, e.g. private cars, goods-carrying vehicles, etc. Aircraft and ships can also be insured as fleets.

FLOOD INSURANCE
Insurance against damage caused by the escape of water from the normal confines of any natural or artificial water course (other than water tanks, apparatus or pipes) or lake, reservoir, canal or dam in addition to inundation from the sea. Losses are normally subject to a minimum excess of £250. The risk is normally insured as an additional peril together with storm damage.

FREIGHT LIABILITY
Products are aimed at transport contractors, road hauliers, freight forwarders, warehouse keepers, packers and consolidators. Cover is available to meet the firm's chosen trading conditions and other legal liabilities.

GOODS IN TRANSIT INSURANCE
Covers goods in transit by land (or by land and sea). Cover is either on (a) the goods protecting the owner's interest; or (b) the liability when a road haulier carries customers' goods. The goods owner insures 'all risks' cover up to an amount per specified vehicle or per consignment when using other transport modes. The haulier can insure on a specified vehicle basis or, on a declaration basis, by estimating annual haulage charges with a selected limit of indemnity. Cover, within the territorial limits, applies during loading, carriage, unloading or temporary garaging of vehicles or trailers. Insurance may include loss/damage to sheets, ropes, clearing up, repackaging and re-sorting following an accident.

GLASS INSURANCE
Breakage of all types of glass (e.g. wired and embossed plate, figured glass, etc.). The insurers will make good or pay full replacement value, including shop fronts with lettering. Any breakage insurable under a fire policy or caused by explosion is excluded. Fixed glass in dwellings is insured under household comprehensive policies.

GROSS PREMIUM
A term normally applied to gross written premiums before deduction of brokerage and discounts.

HAZARD
A physical or moral feature that introduces or increases the risk.

HEALTH INSURANCE
This covers you for private treatment in the event of an illness or the need for an operation. Optional areas of cover include home nursing, some specialist consultations, and 'out-patient' treatment such as physiotherapy.