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Insurance solutions: March 2013

March 2013: Gift Focus readers put their insurance queries, concerns and questions to leading brokers T.H. March

Q: I am planning to launch a retail giftware business. Aside from the obvious cover for stock and premises, are there any other important risks I need to consider?

A: The right insurance cover is crucial for the future protection of your business. There are many aspects to take into account and you would be wise to seek professional advice relating specifically to your business. In the meantime here are just a few important points to think about:
If you are planning to take on an employee you must have Employers' Liability Insurance. This is a statutory requirement.
Public and products liability cover are essential too, as without these there is the risk that you could potentially be held legally liable to pay damages and legal costs as a result of negligence arising during the course of trading. This could happen for example if a member of the public was injured in a trip or fall whilst on your premises.
If you are using commercial finance to open your new business, most providers will want to see a business plan that shows you have arranged insurance in all relevant areas. This may involve arranging cover such as key person cover or critical illness insurance. It may also involve insuring against damage to glass and shop frontage.
Business interruption is another vitally important risk to think about when arranging cover for your new business.

Q: I am becoming increasingly worried about the threat of flooding. How best do I protect my business and income?
A: Clearly there is a lot you can do beforehand if there is the threat of flooding:
Keep yourself informed via the local media or www.environment-agency.gov.uk
Move whatever you can safely and securely to upper floors or higher storage areas (stock, paperwork, electrical equipment etc).
Take whatever preventative measures you can (sandbag areas of potential water ingress such as doors, drains etc).
Have emergency numbers in a safe waterproof place where they can be easily reached. Include in this list your insurers, local authority, utility companies and other useful contact numbers. If the worst does happen:
Contact your insurer as soon as possible. (Brokers to the Giftware Association, T. H. March would take over handling the claim for you at this point if your insurance had been arranged through us).
Record the damage - photographs will definitely help.
Take reasonable action to prevent the damage from worsening once the flood waters have receded.
Arrange temporary repairs where necessary.
Don't dispose of any damaged items unless they pose a danger to health.
Always keep receipts for any work you have had to carry out.

Q: What is Business Interruption Cover? Should I have it?
Imagine the previous scenario has just occurred - you can't open for business because you've been flooded! Clearly your business insurance policy will cover flood damage to premises and stock. If you also have business interruption cover, which I personally think is vital, additional costs such as hiring temporary premises will be met. This means you'll be able to continue trading during the subsequent repair and clean-up period, enabling you to maintain cash flow.
Business Interruption Insurance will also replace the gross profit for your business for the period that it's interrupted by an insured risk (such as a flood.) This covers the recovery of customers phase.
Business Interruption cover will cushion you from the blow and may even be the vital factor that saves your business. Many who don't have such cover will go out of business within 12 months of a major incident.
Many people who have been flooded want to know if their premiums will automatically go up. The answer to this isn't simple. However, if your business is located in an area that is not normally at risk and you have simply fallen foul of unusual weather conditions; you may experience only a temporary increase in premiums. Each case is highly individual and this is where a good broker will be your most valuable asset.

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