Why is insurance important for a business?

Business insurance is there to cover a business and its owner in the event of a loss, like something being stolen or damaged. If something unexpected happens, business insurance can help make sure you’re able to recover financially from it.

Getting the right business insurance should be one of your top priorities if you’re starting, taking over or expanding a business. Let’s take a look at why, and how to get the right cover for your organisation. 

Do all businesses need insurance? 

While nobody wants to think it could happen to them, a lot of things can go wrong when you run a business. You could lose electronics in a flood, have an essential piece of equipment damaged or stolen, or lose income due to business interruption. 

Unexpected events like these could be very costly to recover from, and the loss could limit or remove your ability to make a profit, jeopardising your business. Having business insurance can provide peace of mind, by ensuring you’ve got the cover you need for your business to keep thriving, even in the event of an unexpected loss. 

What types of business insurance should businesses have?

There are a few different kinds of business insurance, and which type of cover your business needs will depend on things like what kind of business you operate, how many employees you have, and what assets your business owns.

While your business insurance cover will be tailored to your business, there are three types of insurance that are most commonly recommended for businesses: contents cover, building cover, and liability insurance.

Most businesses have contents that they use to perform services or sell goods – anything from laptops and phones, to medical equipment, to stock they sell. Because businesses rely on these contents to earn money, it’s sensible to have them insured, unless the cost of replacing them is less than the cost of insuring them. 

If you own the building you operate your business from, you should insure this as well. If you’re a tenant, your landlord will probably have building insurance, but you should check your lease conditions to see who is responsible for insuring what part of the building and its fixtures.

It’s highly recommended that all businesses have liability insurance too. This can protect your business if you’re accused of negligence and need to defend a claim in court or pay a fine. It can cover the cost of the award or compensation you need to pay, as well as covering your legal costs regardless of whether or not you’re found to have been negligent. These defence costs can be very costly and liability insurance is relatively affordable, so it’s a small price to pay for what it could protect you from. 

MAS can tailor a business insurance solution to suit your needs, and a MAS Adviser can talk you through your options. 

What is not covered by business insurance?

All insurance policies have conditions and exclusions, so have a look at your policy documents or contact your insurer if you have any questions about what you are covered for. 

Most business insurance policies don’t cover the impact of infectious diseases. For example, if a business had to close due to the government-mandated COVID-19 lockdown, business insurance normally won’t cover the loss of income resulting from that. 

Business insurance policies are also unlikely to cover the impact of war, riots or strikes. Gradual deterioration, or ‘wear and tear’, is also normally not covered. And while it should go without saying, any intentional or self-inflicted damage, or any fraudulent activity, won’t be covered. However, we recommend you talk to a MAS Adviser if you have any questions about cover for these situations. 

How do I get the right insurance for my business? 

While we can give a general overview of some types of business insurance that are worth looking into, the best way to find out what’s best for your business is to get in touch with us, so we can help you find a business insurance solution that works for you.