SME's - When did you last review your business insurance?

Posted: Wed Jun 13 10:47

If you are anything like the majority of prospective SME clients that we talk to, it's quite likely that you have not carried out a full review of your business insurance needs for some time. 

Why?

The reason often given for this is that many SME's place insurance low on their list of priorities and do not look at their insurance renewal papers until they absolutely have to - immediately prior to the renewal date of their policy. Then, following a quick read over the paperwork received from their existing insurance broker / insurer, the SME simply renews their cover on the existing basis. This can often be a process which the SME has followed for several years. 

 

The Problem

This is a problem because many SME businesses, particularly those in their early stages, are extremely fluid, often offering new products, services and / or entering new markets. Therefore, if an SME has not reviewed their insurance needs for some time then this can result in them having an insurance programme which does not accurately reflect the needs of their business. 

This can then cause further problems, which ultimately, can potentially result in claims being refused by insurers as a result of certain business activities not being insured - all caused simply because the SME in quiestion has not made their insurers aware of the changes in their business. 

Simple Checks

Does the above scenario sound familiar to you?

If so, we have highlighted just some of the most basic checks you (and any SME business owner you know) should be making when considering their insurance renewals. 

Insured Name
Does you policy note the interest of all entities and trading names used by your business?

A Public or Employers Liability claim could be made by a third party against any trading name or entity used by the business so it is essential all entities are noted on your policy. Failure to do so will mean you have no cover for claims made against any unnamed company / entity / trading name(s). 

Business Description
Does the business description noted on your policy adequately describe all of your business activities?

Insurers will only provide cover in relation to the business activities noted on your policy, therefore it is imperative that your policy includes an accurate and comprehensive business description. 

Sums Insured
If you were to suffer a total loss where all buildings, stock, contents, machinery and equipment were destroyed, would the sums insured afforded by your policy provide you with enough cover to put you in the same position that you were in before suffering the loss?

Make sure you are not underinsured; all policies contain an 'average' clause which, in simple terms, gives insurers the right to reduce claims payments in proportion to the level of underinsurance. 

Public & Products Liability - Limits of Indemnity
Limits under this class of insurance usually start at a minimum level of €1,300,000. This may sound a high limit for any business but its not, especially when considering the potential for a catastrophe / worst case scenario claim. 

For example, if you run a Public House or Restaurant, then a single event that is deemed to have been caused by your negligence could potentially result in hundreds of Public Liability claims following injuries to customers. The same principle applies to a product manufacturer who is deemed to have supplied a faulty product, potentially causing hundreds of injuries. 

Limits under this class of insurance can often be increased by several million Euros for a relatively minimal cost, so consider your 'worst case scenario' to ensure your business is adequately protected. 

Additional Cover Considerations
Have you fully considered all insurance covers relevant to your business? Whilst the thoughts of purchasing and paying for additional insurance policies may not sound appealing, the cover provided by some of the policies below can provide further protection and security for your business. 

Failure to purchase some of these covers has seen many SME's go out of business, so make sure you fully consider all policies available to enable you to make an informed decision.

• Legal Expenses Insurance
• Professional Indemnity Insurance
• Directors & Officers Liability Insurance
• Employment Practices Liability Insurance
• Credit Insurance
• Engineering Insurance & Inspection Contracts

This article and the information provided therein gives a very brief, basic outline of just some of the insurance issues that must be considered by all SME businesses. 

Here at BMCI, we would be delighted to discuss these issues further and in greater detail with you, in relation to the specific needs of your business. 

If you wish to do so, please contact our Business Development Executive, Luke Calvert, on 01 883 2305, on mobile at 087 091 8449 or simply send your contact details to us via email at Luke@bmci.ie and we will contact you at a time that is convenient for you. 

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