Insurance Planning Business Related

The role of insurance is important for business because the potential for huge losses is usually higher in the business world.

1. Personnel

          Life Coverage
             - The role personnel play in ensuring business success puts it as one of the most valuable asset in any
               business.
             - Thus, it is vital that risks on personnel are well taken care of.

           Life & Living
             - The coverage is similar to personal on life and living coverage except that in this case, it can be organized
               under the company to enjoy benefits of scale under group schemes.

           Accident & Healthcare
             - The contract and coverage is similar to Accident and health care under the personal segment.
             - This policy reimburses expenses arising from illness or accident.
             - Is provided by employer in a collective form - group health insurance.

           Income & Group Scheme
           There are 3 main factors to be considered :

                   Key Man Policy
                   - This can be taken in respect of one individual or all the key management of a company.
                   - A lump sum is paid to the company in the event of the vital key personnel dying.

                   Fidelity Guarantee
                   - It is an insurance against fraud within the company.
                   - It could be carried out by any of your management or staff.
                   - A very tight control system is required.

                   Group Scheme
                   - The insurance provided by the employer is sold to the employees collectively, thus, it is called a group
                     scheme.

2. Assets
Assets are everything of value that an organization owns. These are also called economic resources. Cash, inventories, machinery and equipment are examples of assets. Without assets, a business cannot run for long. As such, proper insurance coverage can determine a business survival.

          Direct
          When insuring assets, 3 main risks to be insured against are :
             - Fire - causes direct damages to physical property.
             - Special perils - storm, tempest, flood, burst pipes, earthquake impact, riots, strikes, civil commotion,
               malicious damage.
             - Theft - breaking in or out (a physically forced entrance or exit must be proven). 

                   Property
                   - Value is the most important factor to watch with regards to property.
                   - Consider the cost of rebuilding the existing premises (fees, demolition of old building, inflation during
                     rebuilding).
                   - This sum might be higher than pure market value.

                   Equipment
                   - Includes machinery, plant, furniture and fittings.
                   - Look out for replacement cost (consider inflation too).
                   - Make sure new items are included as business keeps expanding or new ones are established.

                   Stock
                   - Stock tends to fluctuate considerably from month to month.
                   - Allow for a monthly declaration of stock value.
                   - This will ensure that you only pay to insure the actual stock figure in any one month.
                   - Do remember that stock is insured at cost price and not selling price.

                   Computers
                   - Under general equipment policy, computers will be covered against physical damage.
                   - It is important to consider the cost of rewriting the records in the event of a fire for example.
                   - There might be limitations and exclusions in a standard fire policy.
                   - Cover your software separately if necessary.

                   Money
                   - This is usually covered by an `all risks` extension to one of the main policies.
                   - If your business requires very heavy payroll or it is a cash business such as a restaurant, then money is
                     an important factor.
                   - Adequate arrangements must be made for removal of cash from the premises or for storing it overnight.

                   Engineering
                   - It is a special cover for mechanical equipment (lifts, escalators, boilers etc) and machine tools.
                   - Safety aspects are main considerations in determining premium.
                   - Routine inspections would be made too.
                   - Ensure proper coverage for even a simple breakdown and its effects.

                   Motor Vehicles
                   
                   There are 3 types of motor insurance :

                   - Third party - protects against third party claims.
                   - Third party, fire and theft - protects against third party claims and against fire or theft.
                   - Comprehensive - covers all aspects (accidental damage, third party claims protection, fire and theft).

                   Goods In Transit
                   - Necessary to cover stock while in transit.
 

3. Personnel
Insurance must be taken to protect a business from any interruption in its ability to earn profit.

          Actual Loss Of Gross Profit
             - Insurance against actual loss of gross profit covers not only self-inflicted drama but also those
               imposed by outside influence.
             - Example : your major supplier's factory burns down. You can't get supply for the next 4 months. Gross profit
               is affected.

           Additional Cost Of Working
             - This type of policy suits businesses providing services rather than manufacturing products.
             - Example : the office block in which your business is based, is damaged by fire.
             - You must find temporary offices and pay rent, extra stationery etc.

           Credit Insurance
             - This is insurance against bad debts.

4. Liability
The amounts a firm owes to others are its liabilities. A proper management of liability is thus important to make sure that a business is well protected against future risks in the form of liabilities.

          Actual Loss Of Gross Profit
             - Employer's liability is relevant when a full-time or part-time staff is employed.
             - Example : your major supplier's factory burns down. You can't get supply for the next 4 months. Gross profit
               is affected.

          Public Liability
             - This is not a legal obligation.
             - It is a practical cover against any claims.
             - It provides insurance cover for one's legal liability to anyone against whom you or your staff inflict
               accidental injury or damage.

          General

                   Product Liability
                   - Value is the most important factor to watch with regards to property.
                   - Consider the cost of rebuilding the existing premises (fees, demolition of old building, inflation during
                     rebuilding).
                   - This sum might be higher than pure market value.

                   Professional Indemnity
                   - This is important for professionals such as doctors, solicitors and accountants.
                   - An advice which goes badly wrong, could adversely affect one's business and resources.

                   Engineering Liability
                   - It is an extension of asset insurance.
                   - If for example, a lift in your shopping complex is covered for accidental damage or breakdown, there is
                     also the need to insure against the liability claims arising from the lift causing injury to users.