The recent strawberry sabotage by a reportedly disgruntled employee – and potentially others who appear to have simply jumped on the bandwagon for some terrible reason – is a timely reminder of the importance of business insurance.
With many businesses facing difficult economic times due to rising costs, increasing competition as well as changes to consumer behaviour and needs, it is easy to see how many people forget about, or play down, the practical implications of business insurance.
That lethargy is probably not helped by the number of different policies that there are to potentially consider, including worker’s compensation, vehicle, home-based business requirements, professional indemnity, public liability, cyber crime, travel, directors and officers, key man and property insurance.
Sabotage safety net
There is, however, a second type of cover that is often either ignored or underinsured, but which protects a business from either internal or external factors that impact on sales, brand and reputation.
That’s because rents, salaries and even profits are still needed in a shut-down, which may be due to fire, sabotage, weather (as appropriate) and even the loss of a key person due to unforeseen circumstances like death.
As such, businesses need to review their business needs in the event of a serious loss of revenue, which can be insured against.
The primary types of insurance that cover these types of contingencies are:
Professional liability, which covers the business against negligence claims causing harm that can be traced back to omissions or failures by the business.
Issues such as adequate warnings about the use of the product, failure to perform not only as stated but implied or generally expected, where there were adequate safety systems and processes that should have been implemented, adequate levels of staff training, and the creation and updating of proper manuals and procedures, etc.
Product liability is needed when the business manufactures products for sale on the general market.
Even a business that takes every possible step to ensure its products are safe can find itself named in a lawsuit due to damages caused by one of its products, including how it was used.
Business interruption is required if a disaster or catastrophic event occurs and the business’s operations are interrupted.
During this time, the business will lose income due to staff not being able to work or the market has been closed due to the event.
This cover compensates a business for loss of income during these events, covers many of the costs that will continue and can even include a profit margin.
By having the right insurance in place, a business can avoid a major financial loss due to litigation or a catastrophic event such as we have seen recently in the strawberry sabotage example.
However, it’s vital that you check with your insurance specialist to find out which forms of insurance are available as well as work with your accountant to determine the level of cover you need.
While we all hope for the best, we must plan for the worse.
So, these insurance premiums should not be seen as an expense but rather a cost of doing business.
At the end of the day, if you can’t afford cover then maybe there is a bigger question that needs to be answered.
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