Self Employed Insurance

Insurance is one of those expenses which come around year after year, and you may be tempted to ask if you could not miss it out. You seem to pay in, and never make a claim.

There are risks in all areas of business, and you could be wiped out if you did not have the right insurance cover. Some insurances are, indeed, compulsory. If you have employees, you are obliged to display an employer's liability insurance certificate. Certain types of business may be required to have particular types of cover under health, fire and safety regulations, and, of course, every road vehicle must carry at least third party insurance cover. If you have a mortgage on property, the mortgage company will almost certainly require at least fire and damage insurance cover on the building.

Reviewing your Insurances

Within this general guideline, always keep your insurances under review. It is probably not a good idea to change your insurance company every single year, to chase after the cheapest premiums. But it usually pays to have a thorough insurance review every five years. The best person to do this is an insurance broker whom you trust. The insurance industry is very sophisticated, and cover is available for every risk you could imagine, and a few you could never think of. So don't let yourself be talked into taking out every new insurance product that comes along.

Level of Cover

An occasional review should focus on making sure you have the right level of cover. The level of cover is an extremely important factor. Under-insurance can be almost as devastating as not having any insurance cover at all. And sometimes you will find that the level of cover which was set some years ago is now excessive. The level of cover is particularly important in the following types of insurance:

• Buildings - insure for the rebuilding cost, which is not necessarily the same as the market value.
• Stock - make sure that you cover for the maximum amount of stock you could carry at any one time.
• Business interruption - the usual cover is for eighteen months' loss of profits based on your last annual profit figure.
• Equipment and machinery - make sure that you cover the cost of replacing machinery, which is not necessarily the same as its original cost.

Premiums

An insurance broker will be able to survey the market to check whether better premiums are available. Bear the following in mind when thinking about premiums:

• Uninsured excess - if you can accept a slightly higher level of excess (i.e. your claim is reduced by a fixed amount for each occurrence - for example, £50), you may be able to see a great reduction in your premium.
• Discounts - insurance companies often offer discounts on the premiums if you can show that you have taken precautionary measures to reduce the risk (for example, by fitting alarms or fire extinguisher sprinkling systems, etc.).
• Frequency of premium - you may be able to pay the premium quarterly or monthly instead of annually.

Business Risks

There are packages of insurance cover available for practically all types of business. These insurances cover:

• damage and loss to business assets, including equipment and stock
• loss of profits (due to business interruption after a fire)
• specific risks in your trade or business.

Usually, these insurances will exclude certain things such as wear and tear, mechanical or electrical breakdown, shoplifting and pilfering. There may be cover available for these risks, but they will be the subject of a different policy.