Why Business Insurance in Northern Ireland is important
Every business in Northern Ireland should have the correct Business Insurance in place. There are various factors highlighting why this is so important, notwithstanding the fact that Employers Liability Insurance is a legal requirement – and this is why Business Insurance in NI is important! For the purposes of this article; let’s refer to Business Insurance in Northern Ireland as ‘Business Insurance NI’.
Business Insurance NI provides a business with insurance cover for 3 important aspects – this list is nowhere near exhaustive, but are areas we have highlighted which are a major concern to business owners throughout Northern Ireland and beyond:
- Material Damage
- Business Interruption
This is the obvious one. Business insurance will insure you for the material damage that can occur to the business. What we mean here is say for example, you have an Accountants office in Belfast that needs protection for the building itself and contents that the business may own.
One of these most important and most overlooked insurance type around. Again, this is included on a Business Insurance Policy, but the mistake made is not to carefully consider the full impact of fire for example, and leave the business grossly underinsured!
It is also known as Time Loss, consequential loss and Loss of Profits insurance. It gives cover for Financial losses due to an interruption to a business caused by material damage to property. Apart from the Physical Damage or ‘material damage’, the insured may suffer a loss of business income from which to pay the expenses of the business and make a profit. It doesn’t stop there either – the insured will have to think about renting alternative premises to continue trading. These losses are covered by Business Interruption within a standard Business Insurance Policy. We feel that as it is one of the most overlooked covers on a Business Insurance policy (& one of the most important), we are going to look at it greater depth than the more widely known Material Damage & Liability Insurance.
- There are two main covers provided under Business Interruption Insurance under a Business Insurance Policy NI
- The time for which the interruption will affect the business – The Indemnity Period
- The Maximum amount that needs to be insured – The Gross Profit
Business Interruption Case Study: Primark Fire, Belfast
All business owners In Northern Ireland are well aware of the damage caused by the Primark Fire in Belfast last year. Belfast as a whole is still struggling, not to mention some individual business who did not insure business interruption correctly or consider it with enough thought. Primark, were able to relocate and continue trading all be cause they had the correct Business Interruption Insurance place – something you would expect from a large business. Many smaller businesses were not as fortunate. Click here to view a relevant News article from ITV, which will be of interest to Business Owners in Northern Ireland – it simply drives home the importance of Business Interruption Insurance as part of a proper Business Insurance Policy.
The Indemnity Period
This the period beginning the occurrence (let’s say a fire) and ending no later than the indemnity period – during this time a business insurance policy with adequate Business Interruption Insurance will cover any losses. Top Tip – When deciding the Indemnity Period, the type of business, replacement of machinery for example and other factors should be considered to assess how long it will take to get a business back on its feet and trading again – so we can already see this should thought about carefully. When you are getting a quote, don’t simply pick out a figure. Have a think about it, and come back to your broker if it needs to be adjusted.
Business Interruption is not intended to replace Turnover of a Business. The Turnover is simply used to pay business costs and generate a Net Profit.
- Variable Costs: Those that may reduce in proportion to the reduction in Turnover (think of Raw Materials)
- Fixed Costs: This could be rent for example which still needs to be paid even when the business is not operating.
Increased Cost of Working
Certain Costs may occur after a loss to attempt to maintain the running of the business – possible the hiring of extra staff, o rent alternative premises to continue that trade or even advertising that you have moved to another site! These build up and a good Business Insurance Policy with some thought having gone into its set up will have this covered.
There will inevitable costs incurred in gathering information to submit a claim. These will be included within the Business Interruption section of a Business Insurance Policy.
Other Factors to consider
Material Damage Warranty (there must be a buildings policy in place covering physical damage for the business interruption section to work), Fire and Special Perils, All Risks & Engineering factors to consider. As you can see this is a big part of your cover and one that we believe you should give the most thought to.
Public Liability Claims in Northern Ireland are high – one of the highest in the UK in fact! It makes sense that depending on your type of business, to ensure for the correct level of cover. Policies will offer up to £5,000,000 or the more standard £2,000,000. The PL section of your Business Insurance will step in if you are found to be negligent resulting in 3rd party property damage or injury to someone. Employers Liability is normally covered up to £10,000,000 and is legal requirement if you have persons in employment.
In our view, these are 3 exceptionally important parts of a business policy. They are essential elements and must be given serious thought before you buy a policy. We realise this may not be simple to everyone and if you need some more information please contact Property Insurance Centre on 0800 085 3761 & speak with one of our Level 3 Cert CII Qualified Staff who can you some guidance.