Business Planning And Insurance Implications

Businesses in the current economic climate are no doubt constantly reviewing their business plans to ensure continued success in 2012 and beyond. However, it’s also important for business owners to bear in mind that changes to plans may impact their business insurance policy.

When a policy is first set up, the insurer will ask a series of questions to help determine which insurance product is right for you. But businesses often change over time and it’s important not to wait until your insurance policy is up for renewal before you tell your insurer.

MORE STOCK/CONTENTS

One key area of most business insurance policies relates to business contents, which covers the cost of replacing or repairing your trade contents and stock in the event of an incident such as a fire, malicious damage or theft. If you have decided to extend your product range, or you are simply holding more stock, you’ll need to consider the value of the contents, taking into account all equipment, and raise the level that you are covered for.

PRODUCTION OF NEW PRODUCTS/SERVICES

It’s important to inform your insurer if you are planning to diversify into new markets with new products or services. When the policy was originally established, the type of cover provided was based on the nature of your business’ trade. If the company diversifies then it is amending its trade description.

MOVING PREMISES

When you policy was first established, you will have been asked about the structure and condition of your premises taking into account the materials used for walls, floors and roof, whether there are any outbuildings, whether there is a fire alarm and what level of security is in place. If you are planning to move or add additional premises to your policy, this information (along with changes to contact details) will need amending.

Moving premises could also impact the required level of security. Business premises located in cities or towns for example, are at a greater risk to crime than those based in a rural area. Your insurer will also have specified a ‘minimum level of security’ that you must adhere to. This will set out what sort of locks or grilles you need on your doors and windows. If you don’t meet this minimum security level and then go on to make a claim, you may find that the insurer won’t pay out.

CHANGES TO THE LEGAL ENTITY

A company that changes from being a sole trader to a limited firm has altered its legal entity, and has effectively become a completely new company. For this reason, you would need to contact your insurer for a re-quote.

TAKING ON MORE STAFF

When the policy was first established you should have been asked how many people are employed, which would have formed part of your policy. If you find your workforce growing, and you plan to take on more staff, you need to tell your insurer to make sure you don’t invalidate the cover provide by employer’s liability; a legal requirement for any business that employs staff.

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Banks decides to look at quantitative easing to assist economy

Over the past six months the nation has seen the UK’s base interest rate drop dramatically from 5 percent in October of last year to just 0.5 percent by March of this year. This came after a series of six interest rate cuts from the Bank of England in as many months, taking the base rate to its lowest level in the three hundred and fifteen year history of the Bank of England. Read more

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Base rate at lowest in over three centuries

Following the most recent cut to the UK base interest rate the base rate has now dropped to its lowest level in over three centuries. Read more

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Fixed-rates “still” popular

New research has revealed that fixed-rate mortgages continue to be popular among homebuyers even though they have become more expensive in recent months. Read more

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Consumers need “rainy day emergency cash”

All consumers should aim to save up to six months worth of salary in an Isa as a “‘rainy day’ emergency cash”, according to financial experts.

However, Harsgreave Lansdown said that for those who have already used their Isa’s maximum deposit allowance of £3,000 during this tax year “there aren’t really that many options” open to them other than premium bonds or building societies.

Ben Yearsley, investment manager with the asset management provider, said: “A lot of people do hold stocks and shares in their Isa, they like the excitement of holding individual shares. When you get big winners you can make big tax free gains in the Isa.”

As of April 2008 a series of changes are expected to be made to Isa. These changes include an increase in the annual subscription limit for cash Isas by 20 per cent, from £3,000 to £3,600.

The limit for stocks and shares Isas will also go up by 3 per cent, from £7,000 to £7,200.

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Consumers advised to increase contents cover at Christmas

Generous Brits are reminded that, over Christmas, a significant increase in the value of their home contents will impact upon their insurance.

Rural insurer NFU Mutual reported that a recent online poll found 39 per cent of Brits reporting they would spend between £150 and £300 on presents over the festive season this year.

Meanwhile, 20 per cent said they would be spending in excess of £500 pounds on gifts for friends and family at Christmas.

A spokesperson for NFU Mutual, Laura Wood, said, “People do not consider the cumulative value of the gifts which they store or bring into their home during the festive season and it is vital that they remember that the value of these presents will impact on their home contents insurance.”

NFU Mutual set out a series of precautions that could help people prevent thefts at this time of year.

It states that, rather than hiding presents in cupboards, they should be stored in the loft, gifts should not be on display by an open or exposed window and radio and lighting timers could be set to create the appearance of occupancy while residents are out of the house.

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