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Office Insurance Cover - A small business guide

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One of the costs that’s easy to forget about when you first get premises for your business is office insurance.

Whether you rent or buy premises it’s a vital investment that will give you peace of mind.

Here’s the complete Bytestart guide to everything you need to know about office insurance cover.

What is it?

Just like the insurance you take out on your car, office insurance is there to protect you in the event something bad happens that could damage your business. But unlike car insurance, it’s not mandatory.

While it’s highly recommended you take it out on any premises you run, there’s no legal requirement to do so. The only insurance you must have is employer’s liability cover if you have employees (some niche industries must also have very specific types of insurance cover).

Why do you need it?

Your office insurance policy is there to cover you against the day-to-day risks of operating business premises. These can include catastrophes such as fire, flood and burglary, as well as accidents such as a member of the public tripping over on your premises. This may not sound serious, but in the litigious age we live in, that’s as much a risk to your business as a fire is.

Catastrophes hit businesses hard. Whether or not you believe the statistic bandied around that 80 per cent of businesses affected by a major incident close within 18 months, it’s likely that any disruption to your premises is going to take up a lot of your time, which will affect revenue. And that could easily wipe out a year’s profits.

Most big businesses use something called Business Continuity Management to spot potential risks and ensure the business will continue in the event of a crisis. As the owner of a small business, you probably won’t do that much planning. But you do need to know that if something bad happens, your insurance company will be there to help you get back to normal as quickly as possible.

What’s covered?

An office policy tends to lump together a number of different types of cover into one policy. This is a good thing and should save you a lot of time shopping around to find the right cover.

All standard policies should include contents insurance, which will protect and replace everything in your premises if it is stolen, damaged or destroyed. Many policies include glass cover to protect the windows of your office. And they could cover money held on the premises – handy if customers like to show up to pay off accounts with cash. Check the small print of policies whether employees are covered while taking that cash to the bank.

Look out for policies that include an element of compensation for business interruption. Not only will this give you peace of mind in the event of a crisis, but it gives the insurance company an incentive to speed claims through quickly to limit their compensation payouts.

What’s not covered?

Insurance companies will often offer the opportunity to bolt many other types of commercial insurance onto your policy… by that we mean up sell you! These will typically include the biggies such as employer’s liability (which is required by law), public and product liability which offers protection for a business that hurts its customers in some way, and professional indemnity for service businesses.

Other policy bolt-ons could include:

• Debt protection (known as book debts), which will help track down and pursue customers that owe your business money and didn’t pay because of a crisis
• Commercial legal protection, which gives you a cushion against potential legal costs in the event of a dispute
• Employee dishonesty covering the loss of money or property
• Computer breakdown cover, helping protect against the increased cost of trading if IT equipment fails
• Terrorism cover, helping business continuity if your operations are directly affected by terrorism

And some more sensible ones that are more relevant to small businesses include business travel to keep you and your employees covered no matter where you work, and personal accident cover. This will pay out if you or key employees are hurt or killed.

What do you need to watch out for?

Two words – up sell. You can get practically anything insured, but as a small business owner who needs to keep costs under control, ask yourself if you really need it. Protecting against a fire is sensible; getting computer cover doesn’t make sense if you only have three PCs.

As with all insurance, you should also ensure you compare like for like cover while shopping around. It’s a selling tactic to lower prices by reducing cover. And when you are ready to buy, read every line of the policy. It will be time well invested if you ever need to make a claim.

Where do you get it from?

Bytestart recommends Hiscox office insurance. You can get an instant online quote here.

Posted February 20, 2008