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Insurance solutions: September 2013

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

Q: I have been running my small web-based giftware business part-time from home and I'm about to take the plunge and go full time, so I'm looking for a suitable premises. I don't know where to start with regards to insurance. What key points do I need to bear in mind during my property search?

This is a complex subject so you will need to obtain professional help. Go to an established insurance broker (chartered status is a good indication of standards and ethics) who can demonstrate an understanding of the insurance needs of the giftware trade. The broker will be able to advise not only on insuring the buildings but will also be able to help you to cover your stock, contents, shop frontage and glass, legal liabilities to the public and employees, loss of money and business interruption risks. If you're renting a premises you will need to carefully check the lease terms to find out whether you or the landlord have to insure the buildings. If you're buying a property it's likely that the lender will insist on you arranging buildings insurance. An insurer will expect your premises to be well maintained, and preferably of brick or concrete block construction with a tiled roof (often referred to as standard construction), situated in an area which isn't susceptible to flooding. Buildings that are not of standard construction or are situated in a flood risk area are still insurable, but the premium charged is likely to be higher. Premises that are also occupied by other businesses could increase the premium depending on the trade involved. If the electrics are older than 15 years, some insurers will expect this to be checked by a qualified electrician. What is the security of the premises? You may need to improve the quality of the locks and install other protections.

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?
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're 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. In such circumstances you could be held responsible and have to pay damages.
If you're 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 for people who have key roles within the business, 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: What is meant by the 'indemnity period' mentioned on my business interruption insurance?
The indemnity period on your business interruption insurance refers to the period during which your turnover is affected as a result of insured damage. It's very important that your indemnity period is not underestimated. This is because finding alternative premises, or demolition, planning and rebuilding as a result of any major damage may take much longer than expected. Even when you're back in business and trading, it may take longer to recover your turnover than you think so make sure you are fully protected and your indemnity period provides you with a long enough breathing space to get back on track.

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