Business insurance options include:
Business premises insurance, also known as commercial buildings insurance
Business assets insurance, also known as business contents insurance
Public liability insurance
Employers‘ liability insurance
Professional indemnity insurance
Other specialist policies
The level of cover available for each different type of policy is subject to the individual policy terms of each insurance company. You should always check the policy documents to see what's included as standard and what is considered an ‘optional extra’ i.e. available at an additional cost.
In this part of our guide we look at insurance for business premises and contents.
Insuring your business premises
If you have business premises then a business premises insurance policy will cover your commercial buildings against a range of risks, for example fire, explosion, storm damage and flooding. Some insurance companies offer ‘all risk’ insurance which provides cover for other damage and loss as specified in the policy terms, including accidental damage cover.
What level of cover will I need?
When you take out a business premises insurance policy you will need to insure the premises for the full rebuilding cost, also known as the ‘reinstatement value’, rather than the market value. The reinstatement value is the cost of rebuilding the property in the event of a total loss; your insurance company may give you the option to add on an additional percentage to protect against underestimates and index linking.
Don't be tempted to under-insure in order to cut costs, as should you need to claim then you will be limited to the amount you insured the premises for regardless of whether the actual loss or damage is more.
What if I am a tenant?
If you are a tenant then it may be your landlord who is responsible for insuring the premises, unless the business has a shop front, in which case the responsibility for acquiring suitable insurance cover will normally lie with the tenant. If your landlord is responsible for insuring the premises and your lease complies with the Code for Leasing Business Premises in England and Wales 2007 then the insurance should be fair, reasonable and represent value for money. You have the right to request details of any commission received by your landlord and the details of the relevant insurance policies relating to the premises.
What if I am a landlord?
If you are a landlord then there will be a variety of policy options available to you, including policies for premises that are unoccupied or let.
Insuring business assets or equipment
Insurance for business assets or equipment is also known as business contents insurance. It's designed to cover items such as stock, machinery or equipment and other contents.
What are my policy options?
When it comes to insuring business assets or equipment you will have a number of options open to you. In terms of cover, you'll normally have the choice of ‘replacement as new’ insurance or ‘indemnity’ insurance.
Replacement as new policies are also referred to as ‘new-for-old cover’ and, if the claim is valid, the policy will meet the full cost of replacing items if they are stolen or destroyed; alternatively, the cost of repair will be met if the items are damaged. Unlike replacement as new policies, ‘indemnity’ policies deduct the cost of wear and tear so that the policyholder is put back in the same state or financial position they were in prior to the loss.
There is also the option to take out a ‘business interruption’ policy to insure against loss of profits and increased overheads resulting from, for example, key pieces of equipment or machinery being damaged or stolen.
Working from home
If you operate your business from your home, or work from home on a regular basis, then you may need a specialist insurance policy as standard home insurance will not provide cover for business-related risks.
In the next part of our guide we explain what public liability insurance is and why it's necessary.
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