Insurance

Insuring Your Planned Business Acquisition: A Brief Guide

One of the key tasks you will need to complete in conjunction with the purchase of your business is to arrange business insurance protection. There are a range of insurances to cover you and your business against a wide variety of risks. Some are mandatory due to statutes or legal agreements and must be in place prior to completion, others are optional.

Examples of important insurance covers you need to consider are as follows:-

  • Buildings – If you are taking a lease on the building this cover will normally be arranged by the Landlord. Lease agreements need to be checked in this regard. Tenant’s improvements to the building, including those made by previous tenants will not be insured by the Landlord and need to be insured by you. If you are purchasing the business premises using a mortgage or other loan your bank or lender will insist on adequate insurance protection. In all cases you should ensure the building is properly insured to enable it to be repaired or rebuilt quickly following damage in order for your business to resume full trading as early as possible.

  • Contents – This comprises furniture, fixtures and fittings and any other contents in the premises. Appropriate insurance cover is recommended and may be a condition of any loan or equipment lease agreements.

  • Employer’s Liability – It is a legal requirement for businesses to insure against claims from employees injured at work. The standard indemnity limit is £10 million. The minimum legal requirement is £5 million.

  • Public & Products Liability – This form of insurance protects the business in the event of an accident or injury being sustained by any member of the public. This cover is critical to protect against legal costs defending claims and providing for damages awarded in UK courts.

  • Loss of Profits – An optional but critical form of insurance. It protects your business profits in the event of a loss of trading income or pays additional working costs following damage to the premises or contents by an insured “peril” e.g. fire, flood or storm damage.

  • Fidelity – again an optional insurance which will cover you should staff steal money or stock from the business. An increasing risk where business is done electronically or records are held electronically or electronic banking facilities are used.

  • Key Man / Key Staff Life Insurance – You and any business partners may be critical components to the continuing success of your business. Death of Key Personnel can cause a loss of business, problems funding the purchase of their shares or repaying loans. Life assurance is recommended.

  • Income Protection – This provides income for the insured persons and is designed to provide for medium to long term ill health causing absence from work. It reduces the impact on the business by meeting income requirements of the insured person and allowing the funding of additional locum costs minimising additional costs not budgeted for.

  • Personal Accident & Sickness – This provides set financial benefits following accidental injury or illness to insured people and is designed to provide for injuries or illnesses that cause temporary absence from work. It can also provide benefits for permanent and total disability by accidental injury or death.

  • Pensions & Investments – It is mandatory for a business employing five or more staff (including part-time employees) to offer employees the option of a stakeholder pension. If you are acquiring an ongoing concern then you are likely to inherit such a scheme. If you plan to expand and employ five or more staff, it is important to bear this in mind to comply with the law.

Insurance is a complex area and it is difficult to be sure you have made adequate arrangements until a claim occurs. Therefore we strongly recommend you contact Independent Insurance Consultants to help you make informed decisions. They will provide you with free advice, facilities to arrange suitable cover and ongoing services to include claims advice.

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